Stock Market Diwali Muhurat Trading : India's Unique Stock Market Tradition
What is Muhurat Trading ?
The Indian stock market has a tradition that integrates between the world’s contemporary economies and India’s culture and traditions. stock market diwali muhurat trading is one such peculiar practice which takes place every time on the occasion of Diwali, the festival of light. While muhurat trading on diwali is similar to any other trading day it has a special significance. It symbolizes prosperity and is celebrated each year at the beginning of a new of the Hindu calendar financial year. A one hour session of investors, brokers and traders they all hope to find prosperity and wealth.
This paper will aim to provide background information on Muhurat Trading, highlight the meaning and implications, outline the rites, and describe how muhurat trading on diwali is conducted. We shall also discuss its effect on the stock market, speculators and the Indian economy as a whole. Further, the learned global markets from this centuries old practice shall also be reviewed.
Various aspects and facts about muhurat trading are explained here This article discusses the origins of muhurat trading.
In order to give a comprehensive account of understanding stock market diwali Muhurat Trading it becomes crucial to discuss the concept on which it lies, viz., Diwali. Officially called Deepavali, Diwali is one of the most important festivals which has its origin in India and it is observed in many countries that has large Indian population. Although its origin is rooted in satanic activities, today the festival denotes triumph of light over darkness, knowledge over ignorance, good over evil and so on. It is mentioned connected with Lord Rama’s homecoming after fourteen years of vanvas or exile and worshiping of Mata Lakshmi- the goddess of wealth.
In Hindu tradition, some months and days or “muhurats” are regarded particularly favorable for beginning some sort of activities. They are ceremonies that are timed by horoscopes which suggest that it is time for proper planetary alignment. muhurat trading on diwali was, therefore, introduced in a bid to enable clients to start their financial year on a positive note as it is believed that ‘luck’, if there is anything like that, will be on the side of the business people as they commence their trading. Earlier, the new year for the business communities, particularly the Marwaris of western part of India, started on Diwali with Laxmi Poojan and small venture investments. The tradition was upheld in the modern time by the stock market to institutionalize Muhurat Trading in Bombay Stock Exchange and the National Stock Exchange.
Stock Market Diwali Muhurat Trading Importance
A Symbol of New Beginnings
From only a pure business perspective, Muhurat Trading has far greater significance; as for most of them, it is a sacred emotion tied to spirituality. This is the idea that people will gladly fund something in this spiritual time, expecting that it will be fruitful in the future. For many investors, especially those belonging to the old rich business groups, it’s the New Year beginning from Samvat – the Hindu financial year.
Actually the word ‘Muhurat’ itself defines an auspicious period of time. In particular, it is successful for Indians to start something new during a special ‘muhurat’. It even extends to businesses, marriage, and important events in people’s lives. Unlike with other trading sessions, Muhurat trading is used as a way of making the first business trade of a particular year in a hope of initiating good business fortunes in the trading year.
Relations and Celebrations with Cultural Connection
Stock market diwali Muhurat Trading is also a time when people involved within the stock market feel that they can share the joy and triumphs of Diwali. Everyone engages accordingly, dancing and dressed in traders’ uniform including stockbrokers, traders as well as the investors. The reserved regional offices of stockbrokers and the floor of the exchange have been decorated with flowers, tiny lights, and rangolis just like on the occasion of Diwali.
The occasion is notably embarked by the conduct of a Lakshmi Puja in which participants pray to the goddess of wealth before trading activities. This fact of executing a fair amount of ritual along with conventional financial business is the strength of Muhurat Trading – an event which epitomizes the oriental culture and business community of India.
Diwali Muhurat Trading Time and Date
Stock market Diwali Muhurat Trading Time is a one-hour session held on Friday, November 01, 2024, typically between 6.15 pm and will end at 7.15 pm on Friday. There will be a 15-minute pre-open session as well. The trades taking place during the special muhurat session will be settled the same day. In other cases, the event is celebrated on Diwali or on the preceding day depending on the status of the Hindu calendar.
Actually, the process of muhurat trading on diwali resembles any other trading session carried out in the BSE and NSE. It comprises pre-opening, continuous trading and closing sessions. Nevertheless, the turnover is traditionally lower and often day traders enter only to make a small deal.
However, the fact is that during this duration the market is more active than normal as the traders, retail investors and institutional players are also trading with the hope that they will get good returns due to the good time.
Symbolic Investments
Unlike large, speculative trades many investors especially retail investors trade during the muhurat trading on diwali session using a token amount. There are no calculation for additional income to be gained but it is just ensuring that a good relationship is started off when a new financial year starts. Often, blue-chip stocks and shares of fundamentally strong companies are the preferred choices for these trades.
However, some institutional investors and high-net-worth individuals may engage in more significant transactions. These trades can influence stock prices, leading to short-term volatility during the session.
Market sentiment and volatility
Even though Muhurat Trading on diwali is essentially an event with much ceremonial value, it has a notable effect on the markets. This means the prices of stocks can at times fluctuate during this one-hour session due to the c varias ventures. The trading period is relatively short, and prices could peak or plummet during the period. Shareholders are mostly conscious of this volatility and many of them tend to exploit short term fluctuations in the stock prices.
However, most investors go to the Muhurat Trading on diwali session with positive expectations and this could translate into a short term rising stock prices. The attitude towards stocks during this session is normally positively charged and this adds to the general feel good factor in the market.
Muhurat Trading on diwali with reference to Investor Behavior
Retail Investor Participation
Stock market diwali Muhurat Trading has a special significance to the common man investors and most users are rooted with traditional beliefs. For these investors, financial aspects are of no greater importance than the emotion and spiritual values associated with it. This is especially the case for pre-millennials and baby boomer investors that have been investing in the stock market for many years.
Sub investors are likely to include Muhurat Trading on diwali among those events that would require members of the same family to participate in investing on the market. This day often, parents take their children to the market to open trading accounts for them and make small investments for them as a way of instilling discipline of wealth creation in them.
Institutional Participation
Muhurat Trading on diwali also involves mutual funds, hedge funds and foreign institutional investors (FILs). Even though the trades they make could be of a greater magnitude, their mentality about the session is longer than the short-run. Market participants, especially Institutional investors, may engage in Muhurat Trading as an adjustment of their portfolio or as a result of the short-term volatility characteristic of that trading session.
The availability of institutional investors in the Muhurat Trading session makes it possible to complete the trading activity due to the brief session.
Sentiment-Driven Trades
Muhurat Trading on diwali involves high sentiment since it follows higher business sentiments in New York. There usually is a positive sentiment in the market related to Diwali and the other name given to the occasion which comes from the word ‘Deep’, that is, ‘Avalokana Deep’ or ‘the light of social distress’ where buyers come together to give light to their social distress through purchase, it makes the period to have a bullish inclination. While other conditions in the wider market may be rather unpredictable, optimism prevails during the celebrations and people pay attention to the positive outlook.
Such trading is done on the basis of some feeling, emotion or intuition which may lead to shifts in price which may have no substantial correlation with the shares of stock being traded. Muhurat Trading therefore does not necessarily give signals to price movements in the stock market for the coming year, warn some investors.
The Role of Stock Exchanges
Bombay Stock Exchange (BSE)
Bombay Stock Exchange or BSE is the oldest stock exchange in south Asia and it holds a very crucial role for Muhurat Trading. The exchange was established in 1875 and it had a history of integrating its functioning with Indian culture. Like any other BSE festive session, Muhurat Trading brings in special announcements to the trading floor and the iconic bell of the exchange to ring at both the start/finish of this trading session.
Floor brokers of the BSE have been seen to be actively involved in the Muhurat Trading session, with some even festooning their offices and performing some ritual before the session begins. The BSE has also put together a special index known as the Sensex that measures the performance of thirty leading companies on the exchange. Fluctuations observed in the Sensex during Muhurat Trading are not totally discounted by investors.
National Stock Exchange (NSE)
India’s other major stock exchange is the National Stock Exchange (NSE) set up in 1992 which also facilitates Muhurat Trading. They include; The NSE brought high levels of automation and transparency to the Indian stock market and investors follow the Nifty 50 index.
Similar to the BSE, the NSE supports the trading known as Muhurat Trading which holds a great cultural value. They help make the session run well with actual time information and ideal trade dealings. The NSE also plays its part by interacting specially with the brokers and the investors during the occasion.
Economic and Market Effect of Muhurat Trading
Short-Term Market Movements
That’s sometimes right in the market as scenarios like Muhurat Trading can affect stocks in the short-term though they are more ceremonial. What this results in is high volatility during the one-hour session that is precisely triggered by trades in blue-chip stocks. Nevertheless, these price movements are normally transient not echoing the fundamental markets in the long-run.
In some cases, the hype leading up to these events can anyway boost the stock prices irrespective of other problems in the local economy or global financial markets. On the other hand in the years when the market sentiment is bearish the session can experience a low activity where most investors are careful in the stocks they deal in.
Long-Term Trends
Although muhurat trading on diwali does not influence the stock market for a sustained period, it may reflect investors’ optimism at the beginning of the new financial year. The tone that is established during any given session will dictate the investor’s behavior for the rest of the month. For example, when Muhurat Trading comes up and buyers are actively choosing to buy stocks, this may signal high stock prices in the near future.
But it should be noted that the market trends and the different indicators, such as economic, corporate, and global in particular, influence the longer-term trends more than anything else.
Conclusion
The idea of Stock market diwali Muhurat Trading perfectly illustrates how it is possible to harmonize the spirit of cultural rituals and references with the world of finance. Most of the stock exchanges in the world trades on the principle of economy, however Muhurat Trading proves that trading can also occur on the backdrop of cultural and religious consideration.
Indian stock exchange like every other day trading methods may be interesting for global investors who get to trade during Muhurat Trading which combines both trading and cultural perspective.
FAQ'S
What is Muhurat Trading ?
It is followed in India especially, BSE or NSE, a Muhurat trading is arranged on Diwali. It is the new year of Hindu accounting year called Samvat.
Is it necessary to trade during Muhurat Trading ?
Therefore, it is not compulsory for the traders to undertake business during Muhurat trading on diwali sessions. It is ceremonial and extra calculated, though the majority of people just employ it to express happy sentiments at the start of the New Samvat year.
Which segments are available for trading during Muhurat Trading on diwali ?
Almost all of the major segments remain active during the Muhurat trading comprising equity, derivative and foreign exchange segments. The actual trading time on this available segment is also declared in advance by the exchanges.
Is the market more volatile during Muhurat Trading on diwali ?
There is nothing as typical about muhurat trading sessions because these are basically ceremonial in nature, and the turnover in the market can be relatively lower during such sessions. Yet this is not always a good thing since few trades mean that any big one may trigger changes in a particular asset’s price.
