Muhurat Trading

Uncover the meaning and strategies for a successful Muhurat trading experience.
Muhurat Trading
3 mins
10 November 2023

An overview

Muhurat trading is a unique and auspicious tradition in the Indian stock market. It is a special trading session held on the occasion of Diwali, the festival of lights. This tradition has deep-rooted significance in Indian culture and is considered an opportune time to commence the new Hindu year (Vikram Samvat 2080) on a positive note. In this article, we will explore the Muhurat trading session in detail, including its significance, historical background, the Muhurat trading time for 2023, and the benefits it offers to traders and investors. We will also provide some valuable tips and tricks for making the most of this auspicious trading opportunity.

The history of Muhurat trading

Muhurat trading is a special one-hour trading session held on Diwali. The origins of Muhurat trading can be traced back to ancient India when trading communities would perform religious ceremonies for their account books and ledgers on Diwali. Over time, this custom evolved into the modern tradition of Muhurat trading in stock markets. The Bombay Stock Exchange (BSE) started Muhurat trading in 1957, and the National Stock Exchange (NSE) has been conducting it since 1992.

Key components of Muhurat trading

This special trading session is divided into several parts to facilitate different types of transactions and ensure a smooth trading experience for investors and traders. The key components of Muhurat trading include:

  1. Block deal session: During this part of the session, two parties agree to buy or sell a security at a fixed price, and they inform the stock exchange about this transaction. This segment allows for the execution of large transactions at a predetermined price.
  2. Pre-open session: The pre-open session is a crucial phase that occurs before the official Muhurat trading session begins. In this phase, the stock exchange determines the equilibrium price, which is essentially the opening price for the stocks. This process usually takes around eight minutes.
  3. Normal market session: The core of Muhurat trading is the one-hour normal market session. This is where the bulk of trading activity takes place. During this period, traders and investors can buy and sell the securities. It is an opportunity to initiate or close out positions on a positive note.
  4. Call auction session: The call auction session is designed for trading illiquid securities. An illiquid security is one that does not frequently change hands in the market and may not have a consistent trading volume. To determine which securities are eligible for this session, the exchange sets specific criteria.
  5. Closing session: The closing session is the final part of Muhurat trading. During this phase, traders and investors can place market orders at the closing price of securities. It allows participants to wrap up their trades at the end of the trading session, aligning their investments with the closing prices for the day.

Muhurat trading time 2023

Muhurat trading for 2023 is scheduled to take place on Sunday, November 12, 2023. The exact timing of the session is determined by the stock exchanges in India, such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This year, the stock exchanges have announced that the trading session will be held from 6:00 pm until 7:15 pm.

The Muhurat trading sessions for 2023 are scheduled as follows:

Block deal session

5.45 pm to 6.00 pm

Pre-open session

6.00 pm to 6.15 pm

Muhurat trading session

6.15 pm to 7.15 pm

Call auction session

6.20 pm to 7.05 pm

Closing session

7.15 pm to 7.25 pm


Benefits of Muhurat trading

  1. Auspicious beginning: Muhurat trading is believed to bring good luck and prosperity. Initiating trades during this session is thought to set a positive tone for the entire year, and many traders consider it an essential part of their annual trading strategy.
  2. Market volatility: Muhurat trading is known for its volatility. With just one hour for trading and potentially higher volumes, market movements can be more pronounced. This offers opportunities for significant gains but also carries higher risks, demanding well-prepared strategies from traders.
  3. Symbolic investments: Traders often make token purchases or sales during Muhurat trading, symbolising their commitment to financial growth in the coming year. It is not about the size of the transactions but the symbolic gesture.
  4. Market sentiment: Muhurat trading often reflects the overall market sentiment, and traders can use it as an indicator for the year ahead. A positive Muhurat trading session can indicate a bullish outlook for the upcoming year.
  5. Community and tradition: Participating in Muhurat trading allows investors to connect with the broader trading community and embrace the cultural traditions associated with Diwali.

Conclusion

Muhurat trading is a unique and culturally significant event in the Indian stock market. It marks the beginning of the new Hindu year, offering traders and investors an opportunity to make symbolic investments and set the tone for the year ahead. The historical significance and auspicious nature of Muhurat trading make it a highly anticipated event in the Indian financial calendar.

As we approach Muhurat trading 2023 on November 12, traders and investors should prepare to make the most of this special session. By following the announced Muhurat trading time, understanding its historical background, and appreciating the cultural significance, participants can harness the benefits of this auspicious occasion to kickstart a prosperous year of trading and investing.

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