Muhurat trading refers to the special one-hour trading session held on the day of Diwali by the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Muhurat trading occurs during an auspicious time window which is believed to bring good fortune and prosperity in the coming year. The tradition started in 1957 at BSE and in 1992 at NSE.
During muhurat trading, traders and investors buy and sell token shares marking the start of the Hindu New Year. The limited trading window typically sees high participation, volumes and liquidity. While muhurat trading is considered auspicious, it does come with risks like impulsive decisions, lack of returns guarantee and susceptibility to rumors.
The session differs from normal trading in terms of duration, purpose and offerings like brokerage-free trades. Participants can trade in equities, futures and options during the session. With thorough research and caution, traders can benefit from the high optimism and liquidity during muhurat trading to make gains intraday or initiate long-term positions.
What are the Muhurat Trading Timings in 2024?
Below are the muhurat trading timings in 2024.
| Event | Timing |
| Muhurat Trading | 1st November 2024 (Friday) |
| Pre-open session | 6:00 PM to 6:08 PM |
| Muhurat Trading | 6:15 PM to 7:15 PM |
| Post-Close Session | 7:30 PM – 7:38 PM IST |
What is Muhurat Trading?
Muhurat Trading is an exclusive one-hour trading session that occurs during the Hindu festival of Diwali. The term “muhurat” translates to “auspicious time,” and there is a belief that conducting trading during this period will result in yearly financial expansion and prosperity. The stock exchanges announce this symbolic trading session, which takes place during the evening of Diwali on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). On this day, the brokerage community also engages in Chopda Pujan, which entails the veneration of their books of accounts.
When did Muhurat Trading start?
Muhurat Trading started in 1957 at the Bombay Stock Exchange. The tradition was begun over sixty years ago, and in 1992, the National Stock Exchange also began participating. As brokers and investors buy and sell tokens to mark the start of the new year, the brief trading window is characterized by high volumes and activity. Many believe that trading during this festive period brings prosperity and financial success in the coming year.
What happens in Muhurat Trading?
Below is what happens during Muhurat Trading Day.
| Session | Description |
| Block Deal Session | This session allows large block trades to be executed at negotiated prices before the market opens. |
| Pre-Open Session | A 15-minute session where traders can enter orders but no trades take place. This helps in price discovery. |
| Normal Market Session | The main 30-minute session is when regular continuous trading takes place at market prices. Traders can execute trades seamlessly. |
| Call Auction Session | A 5- to 10-mminute session where equilibrium price is determined based on aggregate demand and supply. It helps in efficient price discovery. |
| Closing Session | The last 15-minute session is where no new orders can be placed. Only squaring off of existing positions is allowed. |
What are the benefits of trading during Muhurat?
The main benefits of trading during Muhurat are lesser volatility and higher liquidity. Below are more details.
- Auspicious Beginnings: Muhurat trading is believed to bring good fortune and prosperity, and is considered an excellent time to make new investments. The positive sentiment often sets the tone for the coming year, boosting investor confidence.
- Less Volatile: The limited trading hours and lower trading volumes tend to create a calmer and less volatile market environment.
- High Liquidity: The high participation of traders results in high liquidity, making it easier to buy and sell stocks at favourable prices.
- Special Research Reports: In the lead-up to the trading session, various financial institutions release special reports, providing valuable insights into market trends.
- Diverse Investment Options: Financial institutions often launch new schemes and products on this occasion, allowing investors to diversify their portfolios.
- Psychological Benefits: The blend of spirituality and finance serves as a reminder that mindful trading is the path to long-term success.
It is a deeply-rooted Indian tradition, uniting the financial community and bringing prosperity and good fortune for the year ahead.
What are the risks of trading during Muhurat?
The main risk of trading during Muhurat is the impulsive decision making that could occur. Below are the three main risks explained.
- Impulsive decisions: The exciting and auspicious nature of the event can encourage impulsive decisions, which often result in losses.
- Lack of guarantee: Despite the auspicious reputation, trading during Muhurat does not guarantee returns, and the performance of stocks in the session does not indicate future performance.
- Rumours and tips: The festive atmosphere can see rumours and tips spread quickly, which can lead to uninformed trading decisions.
As with any trading activity, research, planning, and caution are key to managing risks.
What is the difference between Muhurat & Normal Trading?
The main difference between Muhurat & Normal Trading is that Muhurat trading refers to stock market trading for a limited period of time on Hindu auspicious occasions like Diwali, while normal trading refers to the regular stock market trading sessions throughout the year. Muhurat trading is held for only 1-2 hours on a specific day whereas normal trading happens for around 6.5 hours daily from Monday to Friday. The key purpose of Muhurat trading is considered auspicious and ceremonial, while normal trading aims at regular buying and selling of securities for investment and trading purposes.
Is F&O allowed on Muhurat trading?
Yes, trading in Futures and Options (F&O) is allowed during the Muhurat Trading session. The trading sessions work similarly to normal trading sessions, except for the hours. Future contracts play a significant role in these sessions, allowing traders to buy and sell commodities at predetermined prices. Options trading also features prominently, providing the flexibility to hedge against potential losses. Both future contracts and options trading are essential tools for managing risk and capitalizing on market movements.
Can we do Intraday on Muhurat Trading?
Yes, intraday trading is possible on Muhurat trading day. Despite the short 1-2 hour trading window, traders will be able to engage in day trading, buying and selling shares within the same session. This allows them to square off positions and book intraday profits or losses, making day trading a viable strategy even within limited timeframes.
Is Muhurat Trading Brokerage free?
Yes, many brokers do offer discounted or even zero brokerage trading for the Muhurat Trading session to attract clients. This is done as a promotional activity by stock brokers to attract new clients. Stock brokers often use such strategies to highlight their services and gain a competitive edge in the market.
How to make Profit in Muhurat Trading?
To make profit in Muhurat trading, do thorough technical and fundamental analysis to identify stocks with strong momentum that can potentially give good returns in the short 1-2 hour Muharat trading window Look for stocks that are likely to see high speculative trading interest and volumes during this session due to auspicious timing. Be prepared to square off positions quickly within the same session to book profits as carrying forward delivery is not recommended.
Which stocks are in focus for Muhurat Trading?
Key stocks expected to see high demand during the auspicious Muhurat session include Larsen & Toubro Ltd with a target range of 2870-2960, Coromandel International Ltd. with a target of 1020-1080, and State Bank of India with a target range of 565-585. Other notable stocks include Spandana Sphoorthy Financial Ltd which could also attract buyers looking to initiate positions during the customary hour of trading on Diwali.
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