Money, Muhurat & Mahalaxmi

It’s the biggest festival of India tomorrow and the world is excited to celebrate it with full fervor. But have you kept some spare time for trading on stock market this Saturday?

It’s the biggest festival of India tomorrow and we hope that you are equally excited like us to celebrate it with full fervor. But have you kept some spare time from 6:15 to 7:15 PM for trading on stock market? Okay. It’s not a joke! It might be normal Saturday for rest of the world, but for our Gujarati and Marwari bhai log, it’s the start of the new financial year. And in India, the stock markets have been dominated by these 2 communities since centuries(Reminiscence of “Harshad Mehta” right?).

Hence, to mark the beginning of “Samwat”(historical Hindu calendar), all the old accounts are closed and new ones are opened; And the first entry in these new books is done by trading during 1 hour in the stock market on the day of Diwali which is auspiciously called – “Muhurat Trading”.

Muhurat according to the Hindi lexicon means ‘an auspicious time’ which is decided by planetary movements. So, what better way and day to ward off those evil losses in the stock market than the day of Diwali? Trading in the stock market on the day of Diwali is believed to bring prosperity and good luck throughout the year and hence the traders on Dalal Street welcome the New Year with great enthusiasm. Their offices are illuminated to welcome Goddess Lakshmi, who is believed to be the symbol of wealth and prosperity in Hindu religion. The time of Muhurat Trading is decided by the Bombay Stock Exchange and National Stock Exchange for 60 minutes and varies every year.

So, is it important for all?

Well, it’s not economically important but if you want to make a beginning in the stock market, then definitely Yes! Muhurat trading sessions are quite insipid. Thin volumes and less volatility, it’s the perfect time for newbies to enter the market and make their first move. For seasoned investors, it’s an extra day of trade granted because the stock markets are closed on the day of Diwali. In recent years, even the Foreign Investors have started taking active positions in the Muhurat sessions and global sentiments have started to reflect on this day too which wasn’t the case earlier. 

Generally, markets end on a higher note on this day. Talking about numbers, since 1992, Sensex has almost always ended on a positive note - to be precise, 71% of the time in Muhurat Sessions with an average gain of 1%. This is because of bias towards buy orders rather than sell orders and it is religiously believed that stocks bought on this day should be held for very long time which are then passed on to the children in inheritance. However, historical data suggests that there is no definite correlation between returns on the day of Muhurat trading and subsequent movements in the market.

The Crux

Long story short, Muhurat trading is a great way to start your investments with a bang. It is an exciting time for investors as well as traders in the market. However, it is important that one does not gets carried away by the expectations on the day. Do remember to base your decision on sound research before investing in any stock and once invested, remember to stay invested in the medium to long term to ensure that you book profits from your holdings.

This year’s Muhurat Trading session will be from 6:15 PM to 7:15 PM on November 14. So wish you good luck and a very happy and prosperous Diwali from the team of Finns&Marks!

By: Anmol Gupta | Isha Garg