What Muhurat trading is, and what it does and does not tell you

Indian stock exchanges open for a special one-hour session on Deepavali, Sunday, 8 November, from 2.20 p.m. to 3.30 p.m., with futures and options trading until 3.40 p.m. Here is what the tradition is about.

What is Muhurat trading?

Muhurat means an auspicious time. For many trading communities, especially in Gujarat and Maharashtra, Deepavali begins a new financial year, Samvat; this year it is Samvat 2083. Traders traditionally open new account books and make a token purchase of shares in the auspicious hour, hoping for a prosperous year. The BSE has held a Diwali session for decades, and the National Stock Exchange (NSE) holds one too.

How is it different from a normal day?

It is short, volumes are usually light, and most buying is symbolic: a few shares of a favourite company for the new year. Trades are settled in the normal way, so they are real trades, with real money.

Does it predict the year?

No. Markets often end the Muhurat session slightly higher, because buyers outnumber sellers on the day, but how the session goes says nothing reliable about the year ahead. This year the Nifty enters the session about 3% below where it closed in last year’s Muhurat session.

What to keep in mind

If you want to mark the day, the usual advice from financial planners applies: buy what you would buy on any other day, for the long term, and do not trade just because the hour is considered lucky.

Markets will be shut on Tuesday, 10 November, for Diwali Balipratipada.