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Understand How Muhurat Trading Works

Updated on September 27, 2023 , 2819 views

The globe is full of varied people, cultures, traditions, dialects, customs, and beliefs. Among all the countries, India is one of the world's most varied countries. India has a diverse background. Among the many festivals, Diwali is one of the most significant and auspicious ones.

Muhurat Trading

Diwali, like every religious holiday, is surrounded by a multitude of beliefs, rituals, and traditions. Muhurat trading is one such custom. Today, in this article, you’ll learn everything there is to know about this particular topic.

What is Muhurat Trading?

Being an Indian, you must be familiar with the word ‘Muhurat’. It refers to an auspicious time as per the Hindu calendar. Events done during this time are considered to be lucky. Muhurat trading refers to trading in the Indian stock Market on the auspicious occasion of Diwali, India's largest festival.

On Diwali, muhurat trading is an hour of auspicious stock market trading. It is a symbolic and ancient ritual that has been preserved and observed by the trade community for centuries. Muhurat trading on Diwali is supposed to bring money and prosperity for the rest of the year since it also marks the beginning of the Hindu New Year.

Traders and investors are usually notified of the non-scheduled trading hour by stock market exchanges. Basically, it is a 1-hour session that starts in the evening around Diwali muhurat for Laxmi pooja.

The Gujaratis and Marwaris, two groups that dominate India's a trade and commerce, are known for worshipping account books and cash on this day. Before the usual, stockbrokers undertake 'Chopra Pooja,' which is the worship of account books at stock exchanges. This custom is only observed on Indian stock markets and nowhere else.

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History of Muhurat Trading

Diwali Muhurat Trading has been held since 1957 on the Bombay Stock Exchange (BSE), Asia's oldest stock market, and since 1992 on the National Stock Exchange (NSE). Trading on this day is a significant and centuries-old tradition that has been observed by the trading community for more than half a century. Buying small amounts of shares on this day is thought to bring Goddess Lakshmi's blessings for the rest of the year.

In some places like Dalal Street, investors still think that shares purchased on this day are supposed to be kept and passed down to the next generation. Diwali muhurat trading session sends two distinct messages to investors: concentrate on quality and invest for the long term.

Muhurat Trading 2023

Muhurat trading goes live on both the platform - NSE and BSE. A large number of investors, both existing and new, intend to invest on the day of Diwali. Here are the complete details of the 1-hour schedule of the trading session for both the BSE and the NSE market to make things easier and timely for traders and investors.

Diwali Muhurat Trading Time BSE 2021

It will be held on 4th November 2021 at 6:15 pm. The duration for the trading is 1 hour.

Event Timings
Pre-open session 6:00pm - 6:08pm
Muhurat trading session 6:15pm - 7:15pm
Block deal 5:45pm - 6:00pm
Auction Call 6:20pm - 7:05 pm
Closing 7:25pm - 7:35pm

Diwali Muhurat Trading Time NSE 2021

It will be held on 4th November 2021 at 6:15 pm. The duration for the trading is 1 hour.

Event Timings
Pre-open session 6:00pm - 6:08pm
Muhurat trading session 6:15pm - 7:15pm
Block deal session 5:45pm - 6:00pm
Auction call 6:20pm - 7:05 pm
Closing 7:25pm - 7:35pm

How does it Actually Work?

This 1-hour trading session is such hype in the market; you must be curious to know how it actually works. As it is different from regular trading sessions, you must be occupied with a lot of questions. In this section, you'll get to know things related to this trading session.

On the occasion of Diwali, both the NSE and the BSE allow trading for a limited period. The muhurat trading time is usually split into the following sessions:

  • Pre-open session - During this session, the equilibrium price is determined by the stock exchanges. This session lasts for about 8 minutes.

  • Muhurat trading session - In this session, real trading takes place where investors buy shares from a Range of companies available. It lasts for an hour.

  • Block deal session - In this session, two parties decide to buy or sell shares at a determined price and inform the respective stock exchanges about the same and deal is done.

  • Auction call - In this session, Illiquid securities (securities that satisfy the set criteria of stock exchanges) trading is done.

  • Closing - It is the final part of the muhurat trading in which investors can place an order on the final closing price.

Points to be Considered While Investing

From the point of view of investors, Muhurat trading is considered advantageous for them. The stock market is all about prediction on the Basis of proper analysis of charts and figures. Here are a few points to be taken into consideration before making the final decision of Investing in the market.

There will be settlement obligations for all open positions at the end of the trading session. Most traders and investors think that this time period is an excellent time to invest. As the trading window is just for one hour, make sure you select high volume securities if you want to benefit from Volatility.

The markets have been known to be erratic during the muhurat trading period, with no discernible direction. As a result, as a Day Trader, using resistance and support levels as the primary criterion for making trading decisions can assist you in making better decisions. Investing during this time doesn’t ensure a guaranteed profit. The company can perform great during this time period, but its performance can deteriorate. You need to check on its fundamentals and other factors to determine the impact in the long run.

Another consideration is that before investing in a company's stock for the long term, do learn about the company's fundamentals. As Muhurat trading sessions are usually characterised by a high level of excitement, rumours can quickly spread. So, make sure your decision is solely on the basis of your research and not influenced by those rumours.

Beneficiaries of Muhurat Trading

The Muhurat trading session is an excellent opportunity to purchase or sell securities since trading volumes during this period remain high. In addition, the market as a whole is optimistic, as the festive atmosphere of success and wealth encourages people to have a positive attitude towards the Economy and the market.

So, the beneficiaries of the stock market Diwali muhurat trading are both investors and traders, whether they are new or amateur. Talking about newbies, it’s recommended to look for high-quality businesses and buy certain stocks with a long-term vision according to your investing strategy. In case you wish to start stock trading, it’s highly recommended to keep an eye on the stock market during Diwali trading and conduct some paper trading to acquire a feel for the market. Just a one-hour trading window is available during muhurat trading; thus, markets are known to be turbulent.

Most investors or traders would purchase or sell securities as a gesture to acknowledge the auspiciousness of the day of Diwali Poojan; thus, long runners in the trading world, or experienced ones, might benefit from this session of muhurat trading.

The Bottom Line

Diwali isn't only a festival of lights and sweets; it's also a time when you can take advantage of a variety of possibilities. Muhurat Trading, which is merely another Diwali tradition, is one such opportunity just waiting to be seized. If you've been waiting to try your hand at trading, it’s the perfect time of the year, to begin with.

So, what are you waiting for? Start your learning about trading and find your perfect company to invest in and widen your financial horizon during this muhurat trading time. invest smartly and earn effortlessly.

All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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