Why Diwali Has Muhurat Trading & Should You Invest in it?

By Angel Broking | Published on 6th November 2020 | 2993

Why Diwali Has Muhurat Trading & Should You Invest in it?

Muhurat trading is a special symbolic trading session, which stock exchanges hold during Diwali. Both BSE and NSE conduct an hour-long trading session as per the “Shubh Muhurat” or auspicious timing. Trading during this session is believed to bring prosperity and abundance to investors throughout the year. However, there are other reasons as well to look forward to the same. Muhurat Trading mostly encompasses buying orders, which adds to the market thrust and makes the market close with a positive note.

Why is Diwali special for Indian Investors? 

In India, Diwali symbolizes the victory of ‘light over darkness’, ‘good over evil’, and ‘knowledge over ignorance’. People usually clean their houses, wear new clothes, exchange gifts and sweets, and buy gold. But, besides its spiritual significance, it marks the beginning of the traditional Hindu accounting year called ‘Samvat’. Laxmi, the goddess of wealth and prosperity, and Ganesha, the God of beginnings, are worshipped on Diwali. 

Indians, especially Gujaratis and Marwaris, perform rituals to honor account books and their cash chests. Businesses and shops close their old account books and open new books to start the new accounting year on a positive note. Before the customary trading session, investors and stockbrokers perform ‘Chopda Poojan’ to seek blessings from Laxmi and Ganesh. It gives you a good reason to invest during the Muhurat Trading with positive vibes all around.

Muhurat trading timings, its significance, and why you should invest?

Although stock markets are closed on the day of Diwali, Muhurat Trading sessions take place for approximately one hour. The timing of Muhurat Trading changes every year, depending on the most auspicious hour of the day. The trading community has been following this tradition for over half a century now. Since 1957, BSE has been holding this special trading session and NSE followed along since 1992. This year, stock exchanges will hold it on Saturday, 14th November, from 6:15 to 7:15 PM. 

During the Muhurat trading session, investors and brokers buy value-based stocks, which are good for the long term. It is believed that during the particular muhurat, planets are aligned in such a way that brings good fortune to investors throughout the samvat. A lot of investors believe stocks bought on this occasion are to be kept as lucky charms. They buy shares and even pass them on to the next generation. Diwali is also considered to be the ideal day to begin anything new. So, many make their first investment in the stock market during this special trading session. 

Because of these developments, it is observed that markets typically move upwards during the Muhurat Trading session. The investor sentiment is positive with a majority of buying orders across segments. Stock prices remain stable on this day as most investors prefer buying rather than selling. Investors typically engage themselves in value investing during Muhurat Trading.

So, it’s a perfect day to invest in the stock market, be large purchases, token investments, or first-time purchases. However, it’s important not to get carried away and purchase overvalued stocks. While cultural and religious sentiment has a place in an investor’s decision-making process, performing a sound financial analysis beforehand is essential for success in the stock market.