Diwali 2023: What is ‘Muhurat trading’? A look at its history and significance

Every year, on the auspicious occasion of Diwali, while the Indian market is closed, it conducts a special one-hour trading session in the evening known as ‘Muhurat trading’. The word ‘Muhurat’ means auspicious time.

Diwali is considered to be the ideal time to start anything new and Muhurat trading sets the tone of the year for investors. It is believed that trading during the ‘Muhurat’ or auspicious hour brings prosperity and financial growth.

While the market is closed on the day of Diwali, both the BSE and the NSE are open for one hour. This year, the Indian market will conduct the Muhurat trading session between 6:00 pm and 7:15 pm on Sunday, November 12.

According to the Hindu calendar, Diwali marks the start of a new year (Samvat) and this session sets the tone for the upcoming year. The Muhurat trading session will mark the beginning of Samvat 2080 and the end of Samvat 2079. 

Observed for ages by the investor community, this tradition pays respect to Lakshmi, the Goddess of Wealth.

Investors believe that trading on this special occasion brings wealth, success, and prosperity throughout the year.

History & Significance

This practice of Muhurat trading is over half a decade old. The BSE started this tradition in 1957, when online trading was unimagined. Meanwhile, the NSE started this tradition in 1992.

The broking community particularly completes the ‘Chopda Pujan’ and worships the books of accounts on the day of Diwali. There are several other beliefs about Muhurat trading. Gujarati traders and investors buy shares during Muhurat trading.

Before the start of online trading, the traders used to gather at the BSE floor, dressed in festive wear and place orders for stocks they intended to hold for at least the next 1 year.

It is also believed that investors place token orders and buy stocks for their children. These are held for a long term and sometimes never sold. Traders normally book their intraday profits, however small they may be.

While investors should not take very serious financial decisions on this day, many buy some stocks as a token or a symbolic purchase for a better next year. It can also be seen as a time to rebalance or review portfolio at the beginning of the new year.

The stock market (NSE and BSE) will open for an hour for Diwali Muhurat trading on 12th November, 2023 (Sunday). As per the notice by BSE and NSE, the symbolic trading session will be held between 6 pm and 7.15 pm. This includes a 15-minute pre-market session, the stock exchanges said in separate circulars.

Trading would take place across various segments like equity, commodity derivatives, currency derivatives, equity futures & options, and securities lending & borrowing (SLB) in the same time slot.

All eyes will be on market trends during the Muhurat trading time. The market is mostly bullish on the day of Muhurat trading, as people are emotion-driven rather than the number on that day. Since many people are calculating the new fiscal year during Diwali, businesses of all sizes buy and sell stock options. While sentiments soar, this Diwali invest with logic on stocks with strong fundamentals for the long term to bring more prosperity and happiness.

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Updated: 11 Nov 2023, 01:27 PM IST

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