Muhurat Trading 2023: A Guide to Auspicious Stock Market Beginnings

  • 31 May 2024
  • Read 9 mins read

In the Hindu calendar, the festival of light, Diwali, is an auspicious time. It signifies the victory of goodness, light, and knowledge over evil and ignorance. Like any religious festival, Diwali is surrounded by a wide range of beliefs, customs, and traditions. Muhurat trading is one such tradition. In this article, you will get to know about the various things that you should know about Muhurat Trading.

What is Muhurat Trading?

Muhurat refers to an auspicious moment. When the planets are in a favourable alignment to guarantee favourable outcomes, it is known as Muhurat in Hindu tradition. 

On the day of Diwali, there is a one-hour window of time that is seen as lucky for stock investments. Every year, the stock exchange specifies the timing for Muhurat trading. Trading during this hour is believed to increase one's chances of earning wealth and prospering all year. Most individuals love buying stocks during this time, which usually occurs on the evening of Diwali.

 

The evolution of Muhurat Trading

Diwali has long been the customary beginning of the new year for stockbrokers. Therefore, during Diwali, during the auspicious time known as the Muhurat, they would open fresh settlement accounts for their clients.  On Diwali, the brokerage community would also worship their books of accounts or perform Chopda Pujan. The practice of Muhurat trading was linked to numerous beliefs. The Gujarati traders and investors bought shares during this time. Still, Marwari traders and investors sold equities during the Muhurat because they thought money shouldn't be in the house on Diwali. This isn't true in the present, even though there isn't any data to support it. Due to the widespread belief that the month is auspicious, the Muhurat trade has evolved into more of a symbolic gesture than a traditional practice nowadays. 

What Does Muhurat Trading Involve?

The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) allow trade on Diwali for a restricted period. The following sections usually constitute the session:

1. Block Deal Session

When two parties decide to buy or sell a security at a set price and notify the stock exchange of their agreement.

2. Pre- Open Session

When the stock market determines the equilibrium price. (usually around eight minutes)

3. Normal Market Session

The hour-long period during which most trading occurs.

4. Call the Auction session

Where trading occurs for illiquid securities. If security meets the requirements specified by the exchange, it is referred to as illiquid.

5. Closing Session

At this point, investors and dealers can submit a market order at the closing price.

Muhurat Trading Timings

Here's a quick look at the BSE and NSE's Muhurat Trading time for 2023: On Sunday, November 12, 2023, Muhurat Trading will take place.

 

Muhurat Trading session

Start Time

End Time

                                                                  Equity

 Block Deal 

5: 45 PM

  6:00 PM

               Pre Open                6: 00 PM                 6:08 PM
   Muhurat Trading Session                6: 15 PM                 7:15 PM

Closing Session

                7:25 PM                7:35 PM
                                                                Derivatives
               F&O                6:15 PM                 7:15 PM

Who can get Benefits from Muhurat Trading?

Diwali can be an excellent day to start investing in stocks if you have never made the investment. Seek reliable companies and buy stocks that are consistent with your investment strategy and have a long time horizon. But if you intend to start trading stocks, it could be prudent to observe the markets during Muhurat Trading and probably need to do some paper trading to become familiar with the things. The Muhurat trading session is an excellent opportunity to buy or sell stocks due to the large trading volumes. Additionally, the market is typically positive because of the festive season, which emphasises wealth and success and makes people hopeful about the stock market and the economy. Diwali is seen by many who believe in auspicious planetary alignments as a time that brings wealth and prosperity. Therefore, Because the trading window is only open for one hour, markets are known for being volatile. Thus, it is advised that new traders exercise trade carefully. Since most investors and traders will buy or sell stocks as a gesture to acknowledge the auspiciousness of the day, experienced day traders can also get returns from this session.

Things to Consider Before Indulging in Muhurat Trading

Before you begin buying or selling stocks during the Diwali day trading time frame, keep the following points in mind:

  • It is generally believed that this is a good time to invest.
  • Settlement duties apply to all trades that are still open after trading hours.
  • The resistance and support levels need to be closely monitored by traders. It has been noted that the markets might be unstable with no specific directions during Muhurat Trading sessions. Therefore, as a day trader, you will be able to make better trading decisions if you place the resistance and support levels at the centre of your decisions.
  • Since the trading window is only open for one hour, make sure the stocks you choose have substantial trading volumes if you intend to profit from the volatility.
  • Returns are not guaranteed if you invest during this time. Macroeconomic conditions and the stock's fundamentals will determine how well it does going forward, even if it does well on Diwali. Invest carefully.

Conclusion

Muhurat Trading can help new and experienced traders by providing an opportunity to begin their investing career on an optimistic note. According to historical data, markets closed positively after Muhurat trading, and indices like the Sensex and Nifty have recently seen gains. During the Diwali festival, this unique practice adds an element of auspiciousness to the stock market.

FAQs on Muhurat Trading

The trading day for Diwali Muhurat is November 12, 2023.

The trading session for Muhurat will last for just one hour.

Yes, intraday trading is allowed during Muhurat trading.

Yes, it is possible to participate in F&O (Futures and Options) trading during Muhurat trading.