Muhurat trading is a very special time for investors and traders on the stock market. The stock exchanges remain closed for Diwali, but they open up for a short window so that traders can carry out muhurat trading.
Muhurat translates to auspicious time, and trading in this time is carried out by traders who believe that it will lead to an auspicious new accounting year. Naturally, there is a lot of buzz around muhurat trading and that time window is extremely busy on the stock exchanges.
So, investors and traders looking to place their trades during this time must stick to muhurat trading facts, be extremely vigilant and prepare before they set out to buy or sell during muhurat trading.
Brief History of Muhurat Trading
In India, muhurat trading has been conducted by the stock exchange for close to 50 years now. The first muhurat trading was held by the Bombay Stock Exchange (BSE) in 1957. Traders and brokers alike consider Diwali to be an auspicious time to invest. Brokers worship their accounting books and close their clients’ books on Diwali day.
Traders across India have different trading rituals for muhurat trading as well. While some consider it to be inauspicious to bring in money on Diwali day, others eagerly buy stocks they consider to be good investments.
Things to know before Muhurat Trading
As mentioned earlier, muhurat trading is an extremely busy time. Therefore, it can help to prepare beforehand so that you waste no time and go into muhurat trading with a clear mind. To do so, remember there are a few things you as a trader must remember. Here’s a checklist of facts about muhurat trading that can help you trade better –
Timing: Muhurat trading will take place on Diwali, November 4 between 6:15 and 7:15 which is a time window determined astrologically. The block deal will happen between 5:45 pm and 6:00 pm, while the pre-open session will take place between 6:00 and 6:08 pm.
Factors affecting the stock market: Remember that stock markets don’t exist in a vacuum. They are impacted by various external and macroeconomic factors. Some of the factors to look out for this year include oil prices, gold prices, and the COVID-19 pandemic.
Markets can be volatile: During muhurat trading, markets tend to be volatile in either direction. Therefore, traders must ensure that they keep track of resistance levels, as well as support levels, which is extremely important.
Rumors fly during muhurat trading: In the hubbub of muhurat trading, rumors tend to spread quickly. You should stay away from such misinformation and focus on muhurat trading facts. Remember, evaluate the fundamentals and stick to building a portfolio that works best for you and helps meet your investment objectives.
Trading doesn’t guarantee returns: Remember, muhurat trading does not guarantee returns even if a particular stock seems to perform well on Diwali. The future performance of the stock depends on the company’s fundamentals and other overarching macroeconomic factors.
Muhurat trading is a great opportunity for all types of investors and traders to rethink their investments and embark upon a fresh start. It can also be an equally overwhelming time for those participating in the sessions. It is, therefore, very important for traders to go into muhurat trading with a clear mind and with the knowledge of what exactly they need from such trading. Brushing up on facts about muhurat trading is essential before one can participate in it. So, invest smart, happy Diwali, and have a prosperous year ahead!