While the market will be shut for normal trading to mark Diwali, the special trading window will be open for just one hour in the evening. NSE said that the pre-opening session will be conducted from 5:45 pm-6:00 pm.
This tradition of executing trades during the auspicious one-hour session is based on planetary positions, as it is considered favorable to start new business activities in the glow of diyas and amidst the vibrant colors of rangoli patterns.
Historically, investors have seen positive returns, with the BSE Sensex closing higher in 13 of the last 17 special sessions.
The equity indices have historically performed quite well on these special trading sessions, though low trading volumes have usually been observed and fewer stocks move during that short duration. The year 2008 was an exception in which the Sensex surprised even the most optimistic bulls by climbing 5.86% in the one-hour session. It settled at 9,008 for the day, but remained range-bound for the rest of the year as the global financial crisis unfolded.
Since 2012, the Sensex has closed in the green zone 9 out of 12 times, including a gain of 355 points, or 0.55%, on November 12, 2023. However, the post-Muhurat trading session has not always been as favorable, with the index falling 7 times in the last 11 years.
Why is Muhurat trading important?
Muhurat trading is significant as it symbolizes the start of the financial new year for stockbrokers in India. Many investors believe that buying stocks during this session brings prosperity for the upcoming year. It also offers traders an opportunity to diversify their portfolios and open new settlement accounts. Overall, Muhurat trading represents optimism and growth for the business season ahead, encouraging confidence in the stock market and reflecting the spirit of prosperity for the coming year.