The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), as per the customary ritual on Diwali every year, will conduct a special one-hour trading session in the evening known as ‘Muhurat trading’. While the market would be closed, the BSE and the NSE will be open for one hour. This year, the Muhurat trading session would be held between 6pm and 7:15pm on Sunday.
What is Muhurat Trading?
Muhurat Trading, a revered tradition, is a one-hour auspicious window on Diwali for stock market activity. The symbolic ritual, aligned with the New Year’s commencement according to Hindu calendar, known as Samvat. Scheduled during the time of Goddess Laxmi Puja on Diwali, it is believed to bring wealth and prosperity to investors engaging in trading during this period.
Date and timing
According to notices from BSE and NSE, the symbolic trading session, including the 15-minute pre-market segment, will be held between 6pm and 7:15pm on Sunday on the occasion of Diwali. Several segments, including equity, commodity derivatives, currency derivatives, equity futures and options, and securities lending & borrowing (SLB), will be open during this time slot.
The practice of Muhurat Trading is a symbolic and age-old ritual which dates back to 1950s. The BSE started this tradition in 1957, while, the NSE started Muhurat trading in 1992. The stock market broker community performs the ‘Chopda Pujan’ (worshipping the books of accounts) on the day of Diwali. Before the start of trading, the traders used to gather on the BSE floor, dressed in festive wear and place orders for stocks they intended to hold.
Diwali is considered to be the ideal time to commence anything fresh like starting a new venture, business, buying a new house, etc and Muhurat trading sets the tone of the year for investors. It is believed that trading during the ‘Muhurat’ brings prosperity and financial growth. While investors should not take serious financial decisions on this day, many buy stocks as a token or a symbolic purchase for a better next year.
According to Live Mint, the market is mostly bullish on the day of Muhurat trading, as people are emotion-driven rather than the number on that day. It is also believed that investors place token orders and buy stocks which are held for a long term and sometimes never sold. Traders normally book their intraday profits, however small they may be. Since many people are calculating the new fiscal year during Diwali, businesses of all sizes buy and sell stock options.