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Everything About Muhurat Trading
Diwali – the festival of joy, happiness, prosperity, and a new beginning. Like any religious festival, there is a plethora of beliefs, customs, and traditions that surround Diwali. One such tradition is Muhurat trading.
Muhurat Trading is thought to bring prosperity and wealth throughout the year.
What is Muhurat Trading
The word “Muhurat” means an auspicious time for any ceremony to begin.
Muhurat Trading is a customary ritual followed by traders in India. This is a one-hour time that is considered auspicious on the day of Diwali for investing in shares.
Usually, it is held during the evening hour of Diwali every year and the stock exchange specifies the time of Muhurat trading every year.
The Muhurat trading session has a religious and sentimental value to many people. A country like India believes in good omens and an auspicious time to make important decisions like investing, be it purchasing gold, or anything new, Diwali is considered to be a great occasion.
History & Significance
Muhurat Trading is a symbolic ritual that has been performed for many years now. It has now become a tradition for traders who used to begin their operations by paying respect to the goddess of wealth, Lakshmi.
According to Hindu Calendar, Diwali marks the beginning of the new year, traders and investors welcome the New Year on a positive note. The Muhurat trading was started in the year 1957 on the BSE and in 1992 on the NSE. The offices of traders are illuminated with diyas and lamps to welcome Goddess Lakshmi, the Hindu goddess of wealth and prosperity.
The broking community would also perform “Chopda Pujan” or worship their books of accounts on Diwali. The old books of account are closed and new ones open marking the start of another amazing year.
Generally, the session is divided into the following parts:
Block Deal Session – where two parties agree to buy/sell a security at a fixed price and inform the stock exchange about it
Pre-Open Session – where the stock exchange determines the equilibrium price (usually around eight minutes)
Normal Market Session – the one-hour session where most trading takes place
Call Auction Session – where illiquid securities are traded. Security is termed illiquid if it satisfies the criteria set by the exchange.
Closing Session – where traders/investors can place a market order at the closing price.
When's Muhurat Trading?
This year it was on November 4, 2021, the stock market had conducted the special one-hour “Muhurat Trading” session between 6:15 and close at 7:15 pm. This time is beyond the normal trading hours but has been fixed as per the astrologically defined auspicious moments of the day.
Preceding to this, the stock exchanges conducted a block deal session which will run from 5.45 pm to 6 pm, and a pre-open session from 6 pm to 6.08 pm.
Do's & Don'ts
A few points that one should keep in mind before investing:
Whether you are a newcomer or a veteran investor, do remember that you do sound research and then invest in stocks. Investors are recommended to not place any large orders during the session.
Traders must remain focused and get past the festive spirit and avoid splashing at the moment.
One can also take advice from financial advisors who have knowledge and expertise so that they can help you achieve your financial goals.
Try to invest in companies that you have conviction in and you are sure about. Investors are recommended to focus on large-cap companies during the session to avoid losses in the volatile session.
Sin stocks are generally not recommended in Muhurat Trading. Sin stocks are the shares of the companies that are involved in those activities which are considered unethical. For example – Alcohol, gambling, etc. Ethical investors tend to avoid these as they convey a wrong thought of making money from exploiting human weaknesses and vices.
If you are planning to invest, then why not start this Diwali. Muhurat trading is a great occasion to start your investments with a bang. However, it is important that you don’t get carried away by the expectations on the day. Be sure you pick stocks based on sound financial analysis instead of market sentiments.
Create wealth wisely!
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