The time of Diwali is important for all investors and traders in the share market. Traders have participated in the customary Muhurat trading on Diwali for many years. A Muhurat is a particular time or moment that is auspicious, and traders try to make trades during the particular trading window wishing for a great trading year ahead.
Diwali is the time when Hindus in India worship Goddess Laxmi for her blessings. It is regarded as an auspicious time to make financial decisions. People make investments or big purchases during the time of Diwali. Muhurat trading is a tradition followed on the Indian stock exchanges when a special trading window of one hour is open during the day of Diwali.
This article discusses details regarding Muhurat trading and how you can participate in it.
What is Muhurat Trading?
Muhurat is a time, according to Hindu astrology, which is considered auspicious to start something new or good. Muhurat plays a significant role in all major events of our lives. On Diwali, traders all over India come together to trade or invest money for the one-hour time.
According to the Hindu calendar, the new year begins on Diwali. Hence, Muhurat Trading signifies that investing at that moment will yield good returns. The Indian stock exchanges remain closed on Diwali but are only open for one hour for the Muhurat Trading session. Muhurat Trading 2022 will happen on October 24, 2022.
On average, the stock exchanges remain open from 9:15 am to 3:30. But on Diwali, it opens only for one hour during Muhurat trading and typically consists of the following parts.
During block-deal sessions, buyers and sellers agree to buy/sell securities at a fixed price and update the exchange.
The pre-opening session lasts only for eight minutes to determine the equilibrium price.
Muhurat trading session
It is the one-hour trading session when regular trading happens.
Call Auction session
It is a session to trade illiquid securities.
During the closing session, traders can place their orders at the closing price.
Understanding the history of Muhurat Trading
The new year starts from Diwali for the business and trader communities in India. They will open new accounts and close the previous year’s balance sheet on this day. Indian brokers will perform the Chopra Pujan, worshipping their books on this day. They will pray to Goddess Laxmi for good business, wealth, prosperity, and success.
The Bombay Stock Exchange started the tradition of Muhurat Trading in 1957, and in 1992, NSE began to conduct it on Diwali. Nowadays, it has become symbolic for individual traders to trade on the day.
Details of Muhurat Trading in 2022
In 2022, Muhurat trading will be conducted on Diwali, October 24, 2022. As per the notice by BSE and NSE, the trading in the equity and equity derivative segment will start at 6:15 pm and end after an hour at 7:15 pm.
The pre-open session will commence at 6:00 pm and last till 6:08 pm.
Matching timings on Muhurat Trading will start at 6:08 pm to 6:15 pm. The modification in the call auction will end at 7:45 pm.
It is important to note that all trading happening during Muhurat will result in settlement obligations.
Muhurat trading in the commodity derivative segment will begin at 6:15 pm and end at 7:15 pm. However, trade modification of call auction will be allowed till 7:25 pm.
The trading session will remain open in the currency derivative segment from 6:15 pm- 7:15 pm. Trade modification and IRD will be allowed till 7:25 pm, and trade annulment requests can be placed till 7:30 pm.
How Muhurat Trading influences the market
For those who believe in astrology, Diwali is an auspicious time to make crucial financial decisions. It is usually beneficial to trade during the Muhurat Trading hour since the market remains bullish and volumes remain high. Both new and experienced traders can participate in the special Diwali trading session.
Muhurat trading has a special significance for Indian traders and investors. It plays a crucial role in influencing the market. Historically, the market closed positive after the Muhurat trading. However, it doesn’t mean you’ll trade any stock during it.
Considering the volatile stock market, you may seek expert advice, track stocks, and fix your strategy before trading. It is important to remember that Muhurat trading isn’t about profitability. Most traders trade in this period considering it auspicious.
Hope you have learned everything about Muhurat trading. This year has been particularly challenging for investors and traders. Global economic conditions, geopolitical unrest, and rising inflation have kept the market under pressure. But you will do well to contain the zeal in your heart and make informed decisions during Muhurat trading 2022.