Muhurat Trading Explained: Know What To Buy This Diwali

You might have heard about Muhurat trading before. It comes around during Diwali, and is kind of an anomaly in the normally rigid schedule of the Indian stock market.

The stock market is open in the evening! This year, it’s going to happen on October 24. Keep reading to find out all about this once a year special event.

The word Muhurat is Hindi for an auspicious moment. It is believed that during this moment, the planets align and the universe is ready to bless the purchase of shares.

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It generally takes place in the evening from 6:15 — 7:15 on the day of Diwali. Otherwise, the market is closed on Diwali. However, considering the fact that on every other trading day, the stock market closes at 3:30, this is indeed a unique occurrence.

How Did It Come About?

Muhurat trading is a tradition that has been passed down since the first stock traders in India. They used to celebrate the new year with a puja, opened new accounts and bought new shares. It was believed that this would start the year on the right note. The goddess Lakshmi herself smiled down on the purchase.

Over time, it has become a symbol rather than a way of doing things and stock investors still like to make a couple of purchases during the Muhurat trading hour.

What To Buy During Muhurat Trading

The general vibe among the investors during muhurat trading can be compared to that of bulls. It is a new year and there is optimism in the air. A lot of people buy and sell shares, and trading volumes are high.

This means if you want to buy something, it wll be easy for you at this time. Orders will be executed instantly. This is of particular importance for day traders.

The nature of the day makes the trading period volatile. We often see huge spikes in either direction. This volatility holds high value for the traders who can also indulge in short-term trading. Futures, options and other derivatives can be useful tools to take advantage of the fluctuations in the market.

However, for more convention, look for blue chip stocks that you can buy and hold for a few years. Strong companies that have shown a stable track records are the ones to buy. You can look for the top-performing companies across each sector for example, in IT, you can check out TCS and in finance, you can go for HDFC Bank. These are giants in the Indian stock market and should definitely be a part of your portfolio.

Things To Keep In Mind

Timings

Refer to the following table to know about the timings of the Muhurat trading session on October 24. For normal retail investors like you and me, 6:15 to 7:15 is our slot. This is the hour that we have to make our move.

SESSION DETAILS

• 5:45 — 6:00 PM Block Deal Session
• 6:00 — 6:08 PM Pre-Open Market
• 6:15 — 7:15 PM Normal Trading
• 7:25 — 7:35 PM Closing Session

Volatility

As mentioned above, this is generally quite a volatile trading session. Sudden spikes may appear at any time, especially because it is only for an hour. There is no time for the market to settle.

Delivery Trades

Please note that all trades are settled automatically once the normal trading session ends. If you have any open positions, they are squared off immediately, and if you have any open orders, they get cancelled.

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Market Closed

Please keep in mind that the market is otherwise closed on October 24. Though, it will not open at 9:15 in the morning and stay open till 3:30 in the afternoon, however, if you want to buy shares on October 24, the Muhurat trading hour is your only opportunity.

No Guarantee

In spite of the overall good vibes that surround this day, there is no guarantee that your trade will do well. The stock market is the normal stock market and its performance will be governed by a horde of different factors which do not include Diwali.

Be mindful about picking strong companies with sound fundamentals. Your investment is yours alone, and making the right choice makes all the difference.

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