What is Muhurat trading and when will it happen this Diwali? Here are the details
Though stock markets do not operate on public holidays, Indian stock exchanges conduct a special one-hour trading session every year on Diwali called ''Muhurat trading''. Because Diwali is considered by Hindus as the most auspicious day of the year, investors and traders believe Laxmi Puja to be an auspicious time to start trading and celebrate a prosperous year.
So what is Muhurat trading? Indian stock markets conduct a special one-hour trading session on Diwali every year. This one-hour trading session on the day of Laxmi Puja is called Muhurat trading.
Why do Indians follow Muhurat trading? When Hindus get married or when Indians inaugurate their new house or even conduct a pooja, they always prioritise doing it at auspicious timings called ''Muhurats''. Traders and investors consider trading during the Muhurat hours on Diwali to be a good time to start the year.
When does the Mahurat hour happen? The ''Mahurat hour'' is a one-hour time span which is the most promising time of the day during which Indians also conduct Laxmi Poojan. Diwali is the first day of the year as per the Hindu calendar 'Vikram Samvat' and investors believe that the stars and planets are aligned on this day to bring fortune to investors.
What is it like? Since the festive mood begins a few days before the day of Diwali, investors generally share positive sentiments during the Muhurat trading session irrespective of what's happening around the world. People tend to buy stocks during the Muhurat trading session for traditional, sentimental and even religious reasons because Indians believe that trading on this day at this time brings wealth, success and prosperity throughout the year. This is also the day when traditional business communities open their books of accounts for the year.
When will the Muhurat trading happen in 2022: Diwali falls on October 24, 2022, and the auspicious time for Laxmi Puja is 6.15 pm to 7.15 pm. Though the stock markets NSE and BSE will be shut for normal trading, they will open for just one hour for Muhurat trading in the evening at this particular time.
Here's how the trading time is set to work on October 24, 2022:
1. Block Deal Session from 5.45 PM to 6 PM. When two parties agree to buy/sell a large number of shares at a fixed price, so much so that they have to inform the exchange.
2. Pre-Open Session from 6 PM to 6:08 PM. During this time, the exchanges determine the equilibrium price.
3. Normal Market Session from 6.15 PM to 7.15 PM. This one-hour-long session allows traders to actually conduct stock trading.
4. Call Auction Session from 6.20 PM to 7.10 PM. During this time, traders trade in illiquid securities.
5. Closing Session from 7.25 PM to 7.35 PM. In the last 10 minutes of the session, traders can place a market order at the closing price.