Every autumn, as lamps are lit in homes, shops and trading offices across the country, a quiet financial ritual unfolds alongside the festivities. Diwali muhurat trading is the special session in which the exchanges open briefly to welcome the new Samvat year, and it has become a cherished date for retail and institutional participants alike. For many families, it is less a market event and more a celebration of prosperity and fresh beginnings. This year, the festival falls on a Sunday, so the muhurat trading time is fixed between 2:20 PM and 3:30 PM on 8 November, ushering in Samvat 2083.
The Meaning Behind the Tradition
Muhurat literally means ‘auspicious ’, and in Hindu belief, starting something new on a favourable day will bring good luck. Many business communities, particularly those from Gujarat and Rajasthan, have a long tradition of opening a new set of account books on Lakshmi Puja Day. This involves performing a short puja (also known as Chopda Pujan) to the goddess of wealth while offering your new books in the hopes of growth, fair business and stability in the year ahead.
This tradition has been adopted by stock exchanges. Brokers used to gather in the trading hall, perform a quick puja and place the first trades of the year. Whilst this tradition is now performed in a modern format via online trading, it still holds the same sentiment of showing respect and hoping for positive outcomes.
How Does The Special Hour Work?
The special hour differs from a regular trading day as it is only for a short period of time. The exchanges will send out a circular stating what times the special hour will occur (usually a pre-market period, continuous period, post-market period and final cut-off). You will be able to place orders in all of the usual segments.
It is worth remembering that these trades will actually settle. This means that if you buy stocks, you will need to pay for them, and if you sell stocks, you will need to deliver them. It is a good idea to have money/stocks in your account in advance.
Trading volumes will often be low, but there is often a nice feel to the market as lots of people will place small symbolic orders. Price movements will usually be limited due to the short nature of the special hour, and many investors will view the hour as a ritual. However, price movements will be impacted by the same factors as any other session. There is no less risk on a celebratory afternoon than on a normal Tuesday so it would be foolish to think otherwise.
Why Sentiment Matters To Indian Households
Over recent years the investing community in India has grown massively. Millions of new investors have opened demat accounts, started SIPs and are really getting into following the market. The opening of Samvat provides a nice way for new investors to get into equities. Buying one share in a company you know and love as a gift for a child or to start your journey can be very sentimental.
Many households will make a big deal out of it. They will finish their evening prayers, light the diyas and have some sweets. Everyone will open up their trading apps and the elders will reminisce about olden days when they had paper contract notes and passbooks. The younger members will show them how to place an order on their phone. The special hour can also be a great opportunity to have some financial discussions between generations in a country where talking about money used to be taboo.
Sentiment can also be seen in the market. Many special hours have ended on a positive note. However, this does not mean it will impact the company. Many commentators will talk about how positive the sentiment was, but this will not change earnings, debt or competitive advantage.
How To Participate Wisely
The smartest way to participate is to balance your excitement with some organisation. Decide beforehand what you want to buy, why you want to buy it and how much you are happy to spend. As you would do on any other day, ensure you have done your research (looking at recent results, valuations and how it fits into your overall portfolio). Buying a fundamentally strong company symbolically can be a lovely way to celebrate.
Don’t fall into the trap of thinking you will receive better returns as it is a special day. The fundamentals of businesses will not change due to the date. Ensure your investment is based on the fundamentals and not because you are feeling festive. If you are a new investor, ensure you are keeping your order sizes small, do not use any borrowed money and don’t try to make quick profits.
Overall, remember that this is a very sentimental tradition and links Indian finance to Indian culture. Use it as a reminder that wealth is built up slowly, with informed decisions, regular saving and respecting the risks. Opening Samvat 2083 can be a great celebratory tradition and a thoughtful way to start your year on a more secure note.
