Muhurat Trading: Meaning, Importance and Timings

What is Muhurat Trading??

Muhurat Trading is held every year at the time of Diwali. The stock market exchanges open for one hour trading session on the occasion of Diwali. Investors place orders and buy stocks for them and their family which are held for long term.  This year it Muhurat Trading session will be held on 12^th November 2023. More than six decades ago, the tradition of Muhurat Trading was started at Bombay Stock Exchange and the National Stock Exchange

It is considered as a symbolic and old ritual that has been retained since ages by the trading community. As Diwali also marks the beginning of the New Year it is a belief that Muhurat Trading on this particular day brings prosperity and wealth throughout the year.  

Importance of Muhurat Trading

Muhurat Trading is seen as a positive start to the new financial year and it is a valued tradition in the Indian Stock Market. Experts believed that investing money in the market during the Muhurat trading day is auspicious. Stock brokers started their new year from the day of Diwali. So they open new settlement accounts for their clients on Diwali. This auspicious time is known as Muhurat. Most of the Hindu investors do Lakshmi Pujan and then purchase shares of strong companies that can generate good returns in the long run.

What Happens during Muhurat Trading

Both NSE and BSE on the day of Diwali permit trading through these stock exchanges for a limited time. The session is divided in to following parts

1. Block Deal Session:- Here two parties agree to sell/buy a security at a fixed price and inform the stock exchange about it.
2. Pre-Open Session:- Where the stock exchange determines the equilibrium price
3. Normal Market Session:- The One hour session where most trading takes place.
4. Call Auction Session:- Where illiquid securities are traded. Security is termed illiquid if it satisfies the criteria set by the exchange.
5. Closing Session:- Where traders/investors can place a market order at the closing price.

Timings of Muhurat Trading

Muhurat Trading will be conducted on November 12,2023

Benefits of Muhurat Trading

1. Auspicious Beginning

Muhurat Trading is believed to bring good fortune and prosperity to traders and investors. It is considered as an excellent time to make new investments or decisions.

2. Market Sentiments

The positive sentiment during Muhurat trading often sets the tone for the coming year. A Positive start can boost investor confidence for trading.

3. Less Volatility

Due to limited trading hours and lower trading volumes, Muhurat trading tends to be less volatile making it safer environment for trading.

4. Brings in profit for Intraday Traders

There are many traders who believe that Muhurat trading brings them a lot of profit as Sensex would have a bullish trend. Hence the traders buy the stocks and sell them on the same day. But one needs to be cautious while doing so as there are Muhurat Trading session where the Sensex has seen loss.

Tips for Muhurat Trading

1. Choose Stocks Wisely

Don’t just buy any stocks just because it is Muhurat Trading. Do a complete research and choose stocks that you believe have strong long term prospects.

2. Set A Budget

It is an important to set a budget for Muhurat Trading and stick to it. Don’t invest money more than you can afford.

3. Be Patient

Muhurat Trading is just one day in the year. Don’t expect to make a fortune overnight. Be patient and focus on investing for the long term.

Conclusion

Muhurat Trading is a unique trading and is celebrated by the traders and investors all over India. It marks a positive beginning of a new trading year and hope and optimism for the traders. But as a wise investor it is important to do a complete research and then make investment.