All you need to know about Muhurat Trading.
Muhurat Trading
Diwali is one of the auspicious festivals according to the Hindu calendar and on this day, one tradition is followed which is called Muhurat Trading in the Indian Stock Market. Here we will cover the details related to the Diwali muhurat trading session, what is muhurat trading, the History behind it, the Timings of muhurat trading, what happens in muhurat trading, and things to know related to it.
What is Muhurat Trading?
Indian stock exchanges hold a special trading session on the occasion of Diwali, which is called Muhurat Trading. Time of 1 hour is considered to be auspicious to trade in the markets and to buy and sell shares. Muhurat is a time when it is believed that any work done during this time will lead to positive results. It is also believed trading during one hour time can lead to better earnings and to create wealth for the whole year. This is a unique thing performed by the Indian Stock Market.
History of Muhurat Trading
The concept of Muhurat Trading in Indian stock markets started back in 1957 at the Bombay Stock Exchange. This was started to take the benefits of ‘Shubh Muharats’. It is believed that trading during this muhurat time is free from any evil forces because planets are aligned in such a way that it can lead to positive results.
Timings of Muhurat Trading
Let us see different muhurat trading times for different types of sessions. Muhurat Trading happens on the evening of Diwali.
| Muhurat Trading Session | Capital Market | Equity Derivatives | Currency
Derivatives |
Cross Currency Derivatives |
Commodity
Derivatives |
Securities Lending & Borrowing Scheme (SLBS) |
| Block Deal Session Open – Close | 17:45 – 18:00 hrs | – | – | – | – | – |
| Pre-Open Market Open – Close | 18:00 – 18:08 hrs | – | – | – | – | – |
| Normal Market Open – Close | 18:15 – 19:15 hrs | 18:15 – 19:15 hrs | 18:15 – 19:00 hrs | 18:15 – 19:15 hrs | 18:15 – 19:15 hrs | 18:15 – 19:15 hrs |
| Call Auction Illiquid session* | 18:20 – 19:05 hrs | – | – | – | – | – |
| Closing Session | 19:25 – 19:35 hrs | – | – | – | – | – |
| Set up cut off time for Position Limit / Collateral value | – | – | – | – | 19:25 hrs | – |
| Trade modification | 18:15 – 19:45 hrs | 19:25 hrs | 19:10 hrs | 19:25 hrs | 19:25 hrs | – |
What happens in Muhurat Trading?
There is very high volatility during muhurat trading. It can be either in green or red. It is considered to be an auspicious occasion, so most people buy the stocks and the market is bullish due to high volume. Intraday traders should take proper calls to trade because they just have 1 hour of trading time, they can’t wait for more. The majority of the time investors are optimistic that the economy is going to boom in the next few years or months.
Things to know before indulging in muhurat trading
- If you are planning to take an intraday trade then one should select stocks with high volumes and only trade in stocks in which they have high confidence because the trading window is only for 1 hour.
- One should invest in fundamentally strong stocks and should have researched the company’s financial statements and prospects rather than having the herd mentality.
- One should consider that investing during this time doesn’t guarantee profits, but it is believed that it might lead to a wealthier and more profitable year.
Do’s of Muhurat Trading
Getting started with the equity Market: Every young investor has a doubt, which is the best time to start with the stock markets. People wait for market crashes to buy shares at a low price and end up buying shares when the share price reaches its peak, due to Fear of Missing Out (FOMO). This is the case with most of the investors.
It is the best option to start investing in stock markets on the auspicious day of Diwali. Though the term auspicious doesn’t guarantee higher profits, it can provide positive vibes to learn from our mistakes and to earn more profits in the market.
Though every day is best to get started to invest in stock markets/ equities because one can’t wait for a crash or dip because no one knows when it will happen.
Don’ts of Muhurat Trading
Avoid Heavy Exposure: As mentioned above many new investors enter the market and due to that many stocks are traded at very high volumes. One shouldn’t take high exposure to any particular share due to high volatility. Only try to invest in fundamentally good stocks in which you are ready to stay invested for the long term and can bear with the short-term volatility.
Conclusion
Muhurat trading is one of the unique features of the Indian Stock Market. It gives a kickstart to many novice investors in the country. Also, it is considered as an auspicious occasion for all of the existing investors in the market.