In Hindu traditions, the concept of a good time or auspicious moment to perform important things is highly valued. “Muhurat” refers to a specific window of time when, according to ancient Vedic astrology, cosmic elements would align in order to bring good fortune. This shubh choghadiya muhurat impacts corporate and financial decisions as well as personal successes.

On Diwali Day, which is one of the most important festivals in India, traders and investors have a tradition called “Muhurat.” As part of this tradition, the stock market opens especially for one symbolic hour that day. Historically, traders considered this time the best for producing wealth, for it was a chance for success and prosperity to enter the new year.

Muhurat Trading is considered an important part of the day for both first-time and professional stock market investors. The date of Muhurat Trading is declared by the BSE and NSE, respectively, on their website’s trading holidays section. This post describes the meaning of muhurat trading, the background of muhurat trading, and the importance of muhurat trading.

What is Muhurat Trading?

Muhurat trading, which derives from the Hindi term “Muhurat,” which means “an auspicious moment,” refers to the practice of a lucky hour whenever planets are believed to be in a favorable alignment. The Indian stock market’s participants make symbolic purchases at this hour, usually in blue-chip companies, to set the tone for a prosperous fiscal year. 

Trade is viewed at this period as a source of prosperity and stability that connects investors to cultural traditions and goes beyond mere financial gain. Every Diwali, “Muhurat,” a unique one-hour trading session, is held by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). By making a symbolic investment at the start of the Hindu New Year, the custom invites success, luck, and wealth. 

India’s main market indices, the Sensex and Nifty 50, have experienced an average Muhurat-to-Muhurat return of 11–13% over the past ten years. This figure, which encompasses both bullish and bearish years, is quite significant because it demonstrates the indices’ resilience and the persistence of investors’ faith in Diwali assets.

What Happens During Muhurat Trading?

To enable various kinds of transactions and guarantee a seamless trading experience for traders and investors, this unique trading session is split up into multiple sections. The following are the main elements of Muhurat trading:

1. Pre-Opening Session: This session is used to collect orders for both buying and selling before Muhurat Trading’s official opening. The stock exchange uses these orders to set an equilibrium price, which reduces volatility once regular trading begins.
2. Muhurat Trading Sessions: For around an hour, investors actively buy and sell stocks during Muhurat Trading’s main event. Many people participate in a symbolic way to celebrate good fortune, putting long-term investments ahead of immediate financial gain.
3. Block Deal Session: During this session, two parties directly deal at a fixed price that is typically agreed upon beforehand. These transactions must be reported to the exchange as block trades.
4. Call Auction Illiquid Sessions: This type of trading session is specifically designed for illiquid stocks, especially those with low trading volumes and minimal market interest. The exchange uses an auction approach to determine fair pricing for these securities based on demand.
5. Closing Session: Traders and investors have the option to place orders at the closing price at the end of Muhurat Trading. This provides a last opportunity to buy or sell stocks at a price that reflects the market’s closing emotion.
6. Trade Modification Cut-off Time: Brokers and participants have a brief window of time after the trading session ends to make small adjustments or take care of any issues pertaining to the trade. Before they are locked in for settlement, last trade modifications are allowed during this session.

Benefits of Muhurat Trading 

Muhurat Trading offers a variety of benefits, both symbolic as well as practical, to its participants in the stock exchange. Here are some of the benefits of muhurat trading.

1. Auspicious beginning: Muhurat commerce is believed to bring wealth and good fortune. Many traders view starting transactions during this session as a crucial component of their annual trading plan, as it is believed to establish a favorable tone for the entire year.
2. Market volatility: The volatility of muhurat is well-known. Market swings may be more noticeable with only one hour allotted for trade and maybe larger volumes. Although there are chances for large profits, there are also more hazards. Therefore, traders must have well-thought-out methods.
3. Symbolic investments: During Muhurat trading, traders frequently buy or sell tokens to show their dedication to financial prosperity in the upcoming year. The symbolic gesture is more important than the transaction size.
4. Market sentiment: Traders can use muhurat as an indicator for the upcoming year since it frequently reflects the mood of the market as a whole. A bullish prognosis for the coming year may be indicated by a successful Muhurat trading session.
5. Tradition and community: By engaging in Muhurat trade, investors can embrace the cultural customs surrounding Diwali and establish connections with the larger trading community.

Conclusion

Muhurat Trading holds significant cultural and financial importance in India, blending tradition with modern investment practices. This auspicious trading session not only marks the beginning of the Hindu New Year but also offers traders a unique opportunity to align their investments with a time believed to be filled with good fortune.