Muhurat Trading: An auspicious day for stock markets!

The current month of October 2022 has been very special in terms of festive vibes for the market participants where the holy days of Navaratri followed by Dusshera were celebrated by the people filled with joy and happiness. Though the Indian equity markets have not been much rewarding to investors the sentiments were definitely upbeat.
Now, in the second half of the current month, the festival of lights Diwali will be celebrated where Goddess Laxmi will be worshipped for the prosperous new financial year. On this auspicious day, the stock exchanges also give an option for the investors to celebrate this holy festival with the financial markets. Every year on Diwali, there is an hour-long trading window, opened by the exchanges to invest in stocks which are popularly called Muhurat Trading. Let us discuss more of this in detail and understand its importance.

What is Muhurat Trading?

“Muhurat” is a word used in the Hindi language which means Hindu measurement of time. It is an auspicious time to start anything new in our lives to make them more prosperous and full of growth. Muhurat trading is only one hour of trading window which is opened on Diwali day every year wherein the country’s people unite to trade or invest their money in financial markets.

What is the history behind Muhurat trading day?

Business enterprises and major stock brokers in India start their new year on Diwali. They open new accounts on this day for the next fiscal year which is called as new Samvat year as well. The broking community specially performs the Chopda Pujan and worships their books of accounts on the day of lights. On this day, they worship Goddess Lakshmi, who is considered the goddess of wealth, fortune, power, and prosperity.
Asia’s oldest stock exchange, the Bombay Stock exchange, initiated the ritual of BSE Muhurat Trading in 1957. The Diwali Muhurat Trading in the National Stock Exchange (NSE) has been conducted since 1992. It has now become one of the most awaited days by retail investors to invest in the equity markets.

How is Muhurat trading conducted?

Unlike the usual weekdays where the market is open from 9.15 am to 3.30 pm, the Muhurat Trading window is only open for an hour at a pre-decided time. Typically, the Muhurat Trading session is divided into the following parts:
Block Deal Session: The two parties (buyers and sellers) agree to buy/sell a security at a fixed price and inform the concerned stock exchange about it.
Pre-Open Session: This session usually lasts for eight minutes and determines the equilibrium price and the opening price of the stocks and the indices.
Normal Market Session: This is a one-hour actual trading session, just like the regular market to trade and invest.
Call Auction Session: This session is especially for trading in illiquid securities.
Closing Session: In this session, traders and investors can place the market order at the closing price.

Muhurat Trading timings for the current year (SAMVAT 2079):

NSE and BSE, both the major exchanges of India will open for an hour for the Diwali muhurat trading on 24th October 2022. As per the notice available on BSE and NSE, trading in equity, equity, and the derivative segment will begin at evening 6:15 PM and will end at 7:15 PM. The pre-open session will begin at 6:00 PM and it will end at 6:08 PM. Matching timings on the muhurat trading session will be from 6:08 PM to 6:15 PM. However, trade modification in the call auction will end at 7:45 PM.