Diwali Muhurat Trading 2023: An overview of timings, significance, and trading opportunities

Diwali Muhurat Trading 2023: Today, despite being a Sunday, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) will open for an hour in celebration of Diwali Muhurat Trading. This symbolic session, including a 15-minute pre-market segment, will take place from 6 PM to 7:15 PM.

Understanding Muhurat Trading

Muhurat trading is an annual hour-long session observed by Indian market exchanges on Diwali, a day considered auspicious for stock investments. Market analysts anticipate heightened interest and participation during this session, as Diwali is traditionally regarded as an "ideal time to start anything new," with potential benefits throughout the year.

Trading during the auspicious hour is believed to bring prosperity and financial growth. Despite regular trading being suspended on Diwali, the one-hour Muhurat window is opened each year. All trades executed during this period are settled on the same day during the 15-minute pre-opening and closing sessions.

Last year, on October 24, the BSE and NSE held Muhurat trading between 6:15 PM and 7:15 PM. This year, the session on November 12 will include a pre-market segment from 6 PM to 6:08 PM.

Additionally, the block deal window will open at 5:45 PM, and in the commodity and currency derivative segment, the Muhurat trading session will take place from 6:15 PM to 7:15 PM. Trade modification will be allowed until 7:25 PM to accommodate any changes.

What Can You Invest In

Investors can participate in various market segments during Muhurat trading, including equity, commodity derivatives, currency derivatives, equity futures & options, and securities lending & borrowing (SLB). The markets closed positively during Muhurat trading sessions in 2022 and 2021, with the Sensex and Nifty gaining 0.88 percent and 0.49 percent, respectively.

Market movements are expected to be volatile during today's session.

Muhurat Trading: History and Importance

The tradition of Muhurat trading, more than six decades old, originated at the Bombay Stock Exchange (BSE) and was subsequently embraced by the National Stock Exchange (NSE). It is a symbolic and old ritual observed by the trading community, believed to bring wealth and prosperity throughout the year.

This year's Muhurat trading on November 12 follows a unique schedule

Block Deal Session: Buyers and sellers agree on fixed prices for securities.
Pre-Open Session: A session lasting eight minutes to determine the equilibrium price.
Normal Market Session: Trading occurs as in regular market sessions.
Call Auction Session: Designed for trading illiquid securities.

All trades executed during Muhurat trading will result in settlement obligations. Intraday positions will be squared off 15 minutes before market closing.

The Tradition and Beliefs Surrounding Muhurat Trading

Muhurat trading is specific to Indian stock markets, and brokers traditionally open new settlement accounts for clients on Diwali during this session. The occasion involves Laxmi pujan, where investors purchase shares of good companies for long-term gains. Muhurat trading emphasises focusing on quality and investing with long-term goals.

Investor Guidelines for Muhurat Trading

Auspicious Day to Invest: Diwali and Muhurat trading are considered auspicious for investing money, with traders often starting the occasion with special prayers and buying shares for long-term holding.

Ideal for New Investors: Muhurat trading is viewed as the most auspicious time for new traders to make their first trade, providing an opportunity to understand the market and experiment with a small investment.

Potential for Intraday Profits: Some traders believe Muhurat trading brings profits due to a bullish trend in the Sensex. However, caution is advised, as losses can also occur.