What is Muhurat Trading?
Stock exchanges hold a special symbolic trading session on the occasion of Diwali, which is named Muhurat Trading. The one-hour session is taken under consideration auspicious to mark the beginning of the traditional Hindu accounting year, called Samvat. Worshipping account books and cash chests on this occasion is common among Gujarati’s and Marwaris, the two primary business communities in India, perform the poojas of ledgers and therefore the wealth chest following a century-old tradition before the new account year is open. Stockbrokers offer Chopra Pooja or worshipping the accounting books before the special trading session begins.
What does history say about Muhurat Trading?
BSE, Asia’s oldest stock market, has been holding Muhurat Trading since 1957 and NSE since 1992. Trading today is symbolic and an old ritual, which is being followed by the trading community for over half a century now.
It’s believed that buying small quantities of shares on this occasion can bring the blessings of Goddess Lakshmi, the goddess of wealth and prosperity, throughout the Samvat year. A couple of investors on Dalal Street still believe stocks bought on today are meant for all times in order that they will be passed on to subsequent generations.
What happens in Muhurat Trading?
On Diwali, both National Stock Exchange and Bombay Stock Exchange permit trading for a limited time. Typically, the session is split into the next parts:
- Block Deal Session – where two parties comply with buy/sell a security at a hard and fast price and inform the stock market about it
- Pre-Open Session – where the stock market 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 standards set by the exchange.
- Closing Session – where traders/investors can place an order at the price
Things to keep in mind before indulging in Muhurat Trading :
Here are some aspects that you simply must confine in mind before you begin buying or selling stocks during the Diwali day trading time (Mahurat Trading).
- Most traders and investors consider this era to be auspicious to form investments.
- All open positions at the top of the trading session will end in settlement obligations.
- While the Mahurat trading session is going to be persisted Saturday (November 14, 2020), the markets are going to be closed on Sunday and Monday (November 16, 2020, on account of Diwali Balipratipada)
- Traders must keep an in-depth eye on the resistance and support levels. During Muhurat trading Sessions, it has been observed that the markets are often volatile in no specific direction. Hence, as an everyday trader, keeping the resistance and support levels at the center of your trading decisions will assist you to create better trading decisions.
- Investors must make sure that they persist with the basics of a corporation before investing in its stock for the long-term. The Muhurat trading session is typically crammed with tons of pleasure and rumors can spread fast. Persist with the fundamentals and invest in sync together with your investment plan and risk tolerance.
- If you propose to take advantage of the volatility, then make sure that you select stocks with good trading volumes since the trading window is merely for one hour.
- Investing during this era doesn’t guarantee returns. Albeit the stock performs well on Diwali, its performance within the future will depend upon its fundamentals and macroeconomic factors.
What is the Schedule for the session?
Muhurat trading will happen on November 14, 2020.
Muhurat trading timeline for BSE:
Pre-open Muhurat Session: 6:00 PM – 6:08 PM
Muhurat Trading Session: 6:15 PM – 7:15 PM
Block Deal Session: 5:45 PM – 6:00 PM
Call Auction: 6:20 PM – 7:05 PM
Post-closing Muhurat Session: 7:25 PM 7:35 PM
NSE Muhurat Trading Timing:
Pre-open Muhurat Session: 6:00 PM – 6:08 PM
Muhurat Trading Session: 6:15 PM – 7:15 PM
Block Deal Session: 5:45 PM – 6:00 PM
Call Auction: 6:20 PM – 7:05
Post-closing Muhurat Session: 7:25 PM 7:35 PM
Muhurat Trading Settlement Timing:
Stock settlement usually happens on subsequent trading days of samvat trading. Hence, it’ll happen in blocks on the subsequent trading day, which is November 16. So, you’ll only sell the stocks after you get the delivery of stocks in your DEMAT, which can be November 17.
Conclusion:
Muhurat trading may be a big event for traders and brokers alike. If you are a replacement trader, it is a superb time to start out out your investment journey. we propose that you simply make an inventory of stocks, supported their performance, which you’d wish to buy during mahurat trading.
“Don’t test the depth of the river with both your feet while taking the risk”
Warren Buffett
