Every year, on the auspicious occasion of Diwali, the Indian stock exchanges open especially for one hour for a special trading session in the evening. This special hour of trading is known as 'muhurat trading'. The word Muhurat itself stands for ‘auspicious’.
While markets are closed on Diwali, both BSE and NSE are open for one hour. This year, the Indian markets will conduct the Muhurat trading between 6:15 pm and 7:25 pm on Monday, October 24.
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 on October 24, 2022, will mark the beginning of Samvat 2079.
Observed for ages by the market trading community, this is tradition pays respects to Lakshmi, the Goddess of Wealth.
Investors believe that trading on this special occasion will bring wealth, success, and prosperity throughout the year and this ritual has been.
History
This practice of muhurat trading is almost half a decade old. In BSE, it started in 1957, when online trading was unimagined. The traders used to gather at the BSE floor during Diwali, dressed in festive wear and place orders for stocks they intended to hold for at least the next 1 year. The National Stock Exchange (NSE) started this in 1992.
According to Wikipedia, Investors place token orders and buy stocks for their children, which are held for the 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 your portfolio at the beginning of the new year.
Nifty Performance
The indices have generally performed decently on this occasion even though the trading volumes are pretty low. In the last 15 years, since 2008, 12 out of the 15 muhurat trading sessions have ended in the green.
Last year, Diwali was observed on November 4 and the indices rose around half a percent higher. The Indian markets have followed a similar trend in the past. In 2020, 2019 and 2018, the indices have risen between 0.5-1 percent in Muhurat trading.
However, they saw minor losses in muhurat trading in 2017, 2016, and 2012.
The best Muhurat trading performance till date was witnessed in 2008 during the peak of the global financial crisis in 2008. In that Muhurat Trading session on October 28, 2008, the indices jumped nearly 6 percent, the highest ever in a Muhurat session.
Muhurat trading 2022
Indian bourses will conduct the Muhurat trading between 6:15 pm and 7:25 pm on Monday, October 24. According to the BSE and NSE circulars, all trades conducted during the Muhurat trading 2022 shall result in settlement obligations.
On account of trading on October 24 and the pay in/pay out transactions for the trade dates October 21 and October 24 shall be settled on October 25 at 8:30 am, the NSE circular stated.
