Muhurat Trading 2022: All You Need to know | Espresso

WHAT IS MUHURAT TRADING 2022

Diwali, the festival of lights, is one of the most prominent Indian festivals. It marks the beginning of the Hindu accounting year called Samvat. Most people consider Diwali an auspicious occasion to make financial investments because of the blessings of Goddess Laxmi.

Published on 18 October 2022

Even when it comes to the stock market, the festival of Diwali holds a special place. Stock exchanges have a special symbolic trading period on Diwali, which is known as Trading. Investors believe trading during this particular hour will help them bring good luck and earn better profits.

If you hold a trading account, it is good to know about trading time, its history, significance and relevance:

What is Muhurat Trading? 

trading is a ritual followed in India, where the stock exchanges allocate a one-hour slot for trading online on Diwali. This one hour is considered auspicious for making financial investments, such as investing in shares. Each year the stock exchanges specify the trading time before Diwali.

What is the History of Muhurat Trading?

Traditionally, Hindus, specifically the Gujarati and Marwari communities in India, highly regarded Diwali as an auspicious occasion to make fruitful financial investments. Hindus also worshipped account books and cash chests on Diwali, hoping for Goddess Laxmi, the goddess of wealth and prosperity, to bless them with better monetary luck. Stockbrokers also performed ‘Chopra Pooja’, where they worshipped the books at stock exchanges.

Over the years, this belief of making financial investments during Diwali was formally imbibed by the stock market. Even though the stock market remains closed on Diwali Muhurat Trading for all online trading accounts, a particular time is designated on the day, allowing investors with a trading account to trade online. BSE and NSE have been offering stock market Diwali Muhurat Trading since 1957 and 1992, respectively.

Today, Trading occupies a symbolic rather than a cultural significance for online trading account holders. Traders believe in this old ritual and consider buying in this particular period to take the blessing of Goddess Laxmi. Some investors hold the stocks brought during the Trading time to pass them on to the next generation.

What Happens During Trading?

Each year before Diwali, the stock exchanges officially announce the Trading time. Typically, this one-hour trading session consists of:

  • Block deal session: In this, two entities agree to buy or sell an asset at a pre-agreed price among themselves, usually in the first 35 minutes of the Trading time. However, SEBI (Securities and Exchange Board of India) specifies some rules for block deals.
  • Pre-open session: This is usually an eight-minute slot of the one-hour Trading time.
  • Normal market session: This is the one-hour stock market Trading time when most of the stock purchase and sale happens.
  • Periodic call auction session: This is usually a 45-minute session that allows for trading in illiquid stocks, bonds or other assets.
  • Closing session:  This is the last 15-minute slot of the Trading time.

For 2020, the Trading time for both BSE and NSE was between 6:15 PM to 7:15 PM on November 14.

Should You Trade During the Stock Market Trading Time?

Primarily because of being a favourable period for trading, the Trading time experiences high trading volumes. Further, since the festive seasons bring out the bullish side of the stock market, trading during the Trading time can be beneficial.

Moreover, if you believe in the alignment of stars for prosperity, you can consider the Trading time good for investment or trading. However, investing during the Trading time does not guarantee profits.

If you are a new investor, you can open an online trading account and make this day to start your investment journey. Existing investors can use their active trading accounts for Trading and do not need to open a special Trading account online.

What Factors to Keep in Mind When Considering Stock Market Trading?

If you want to take advantage of the Trading time, be careful of these points:

  • Select high-quality companies and invest mainly for the long-term
  • Make investments that align with your financial goals.
  • If you want to make a first-time entry during the Trading time, consider studying the market trends and doing paper trading before actually opening a Trading account online.
  • Be watchful as volatility is high during the stock market Trading time. Take positions after careful consideration of resistance and support levels.
  • All open positions after the Trading time result in settlement obligations.

In all, investing during the Trading time can be advantageous but does not guarantee profits. As a wise investor, it is advisable to make investments aligned with your investment goals, time horizon and risk tolerance. If you wish to make the most of the Trading time, you can consult a professional broker to open your Trading account online.

Chandresh Khona
Team Espresso

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