Muhurat Trading Tips for this Festive Season

By Angel Broking | Published on 9th November 2020 | 470

Muhurat Trading Tips for this Festive Season

The muhurat trading day is just a week away and it the right time for the last minute preparation. Count on us to help you warm up. Here are a few muhurat trading tips to have up your sleeve when the day comes.

Why is muhurat trading important?

Muhurat trading draws a lot of attention from traders and broker. Why? The Hindu accounting year begins on Diwali. For centuries, Indian traders are celebrating the day by worshipping Goddess Laxmi, the goddess of wealth and prosperity, and they believe carrying out token trading on this day ensures good business for the rest of the year.   

Following that tradition, muhurat trading started in Indian exchanges. So, on this day,  thousands of investor make customary trading, which they believe will mark the beginning of a profitable trading year. BSE is organizing muhurat trading for half a century now. The oldest stock market in India is performing muhurat trading since 1957. This year too muhurat trading will happen on the day of Diwali. The market will open for a special trading hour in the evening between 6:15 pm and 7:15 pm.  

Here is the timeline for the day

The muhurat trading hour will open at 6:15 pm in both BSE and NSE. The session will last only for an hour.  

Pre-opening session 6:00 -6:08 pm
Block Deal 5:45 -6:00 pm
Trading hour 6:15 – 7:15 pm
Call Auction 6:20 to 7:05 pm
Post Closing 7:25 to 6:35 pm

All trades executed during the session would result in settlement obligations.

Diwali Muhurat Trading Tips

Diwali is an auspicious day to invest and trade, and hence, traders turn up in huge numbers to buy securities. Many believe the securities purchased on this day are for long-term investment. So, they would invest in securities with a strong performance record. This one hour window is considered auspicious, so you would have to react fast. Preparing in advance will you give you a headstart.  

  • Time to start investing: It is an auspicious day for the new investors to begin investing. However, it doesn’t mean you have to go overboard. Start with a token investment. Plan to invest regularly and work on it. We suggest you select a large blue-chip company with a long term investment plan in sight.
  • Time to introspect:  It is time to check on the health of your portfolio and see if it is working to your liking. You might have to readjust the asset allocation on your portfolio according to your changing financial goals and work on a new investment strategy. 
  • Try first trade: It is a good day for the first time traders. They can begin making a small investment and experiment with the trend. Once you gain a thorough understanding of the market, you can pick the best stocks.
  • Not for intraday trading: One may think there will be a lot of opportunities to profit as the SENSEX remains bullish. However, they need to be careful about selecting stocks. The trend had remained bullish on most occasions, but SENSEX also dipped in a couple of instances after the first day of the festival. So, one needs to be careful.

Then what should you do? 

 Follow the muhurat trading stock tips mentioned below.

  • Pick the right stocks: You need to look out for good company stocks with high return or good cash flow to invest. 
  • Diversify portfolio: Try to add different asset classes to bolster your portfolio. It is an age-old tradition to invest in gold on Diwali. So, you can add gold as an asset class in your portfolio. If you don’t want to invest in physical gold, sovereign gold bonds and gold-backed ETFs are good options too.
  • Shortlist stocks: The special trading hour will last only for an hour. If you shortlist stocks you want to buy in advance, it will be easier for you to navigate. 
  • Study the market: The overall market performance will impact trades during Diwali session. The current market remained volatile since the outbreak of COVID-19, so you would need to tread cautiously. Keep both global and domestic market performance in mind while selecting stocks. 
  • Compare technical indicators: Don’t forget to check the technical indicators for the stocks you want to purchase. With the homework done, you can trade confidently during the muhurat session. 

Conclusion 

Make the right plan and trade confidently. Whether you are first time trader or veteran investor, muhurat session is the best time to make a fresh beginning. If you are still unsure, take help from a financial advisor and embark on a  journey of financial independence.