Diwali is not only one of India's biggest festivals but also an important occasion for traders and investors. Every year on Diwali, a symbolic trading session of about an hour is organised, called Muhurat trading.
The community of Indian traders have been observing this ritual for a long time with a belief that trading or investing during the auspicious 'Muhurat' time will bring financial gains, growth and prosperity to them.
What is Muhurat trading?
Muhurat trading is a one-hour customary trading session, mostly in the evening. This year, the BSE and NSE will have a one-hour Muhurat trading session from 6:15 pm to 7:15 pm for trading in equity, equity and derivative segments on October 24.
"As per Indian traditions, the time around Diwali puja is considered one of the most propitious periods for finances. Even though exchanges such as NSE and BSE designate the time of Muhurat trading each year, it generally coincides with the Diwali puja (held on the evening of the festival)," said Prabhakar Tiwari, Chief Growth Officer, Angel One.
Why do we observe it?
It is a symbolic gesture. Traders and investors pay tribute to the goddess Lakshmi - the goddess of wealth and prosperity - and pick their favourite stocks or other financial instruments hoping for a good profit.
Per Hindu tradition, Muhurat is an auspicious moment during which, as it is said, stars and planets are arranged in such a way that gives good results for works done during that time.
When is Muhurat trading this year?
As widely reported by the media, the pre-open session timings are 6 pm to 6:08 pm. Trade modification in the call auction will end at 7:45 pm.
What should you do on Muhurat trading?
One of the biggest things one must ensure is not getting carried away and buying stocks mindlessly. Do research thoroughly before buying stocks on Muhurat. A sound bet will give good returns while a reckless one will be harmful.
"Buying shares on Muhurat trading and starting your investment journey during an auspicious time is not something you can always do. The opportunity comes once a year, and people considering starting an investment must leverage it," said Tiwari.
"However, new or seasoned investors must keep their emotions aside while investing in the stock market during Muhurat trading. Keep fear and greed both aside while investing," Tiwari added.
Also, before investing, decide how much you want to invest and what are your financial goals. Keep the market condition in mind. Investors with low-risk appetite may invest in largecaps stocks which are considered relatively safer than mid and smallcaps.
The market outlook is hazy at this moment. Even though equities are always riskier bets, the risk factor is bigger this year. If you are investing for the long term, focus on stocks that are fundamentally sound and have the potential to grow.
If you are a new investor, you can seek advice from your financial advisor.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.