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Every year on the day of Diwali, both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) conduct a special trading session. Known as Diwali Muhurat trading, the session usually lasts for an hour and is carried out to enable investors to purchase and sell securities on Diwali.
There’s an interesting premise behind this tradition of holding a one-hour trading session on the day of the festival of lights. It is widely believed that whoever purchases during the auspicious day will enjoy prosperity, well-being and wealth for the rest of the year.
According to the notifications from BSE and NSE, the Muhurat trading timing for the year 2023 would be 6:15 PM to 7:15 PM (with a 15-minute pre-opening session from 6:00 PM to 6:15 PM), which is in line with the timings of the previous years. The session is slated to be hosted on Sunday, November 12, 2023. As you gear up for this session with a carefully crafted Muhurat trading strategy, here are some Dos and Don’ts you need to keep in mind.
Muhurat Trading 2023: Dos
There are certain things you must do before you begin to trade during the auspicious window to increase the likelihood of profits and reduce the chances of losses.
1. Establish a Proper Trading Plan
Just like regular trading days, you must craft a proper trading plan for the special Muhurat trading session. Set realistic objectives and define clear entry and exit points depending on the type of asset you wish to trade or invest in.
Traditionally, the stock market on Diwali has witnessed high levels of investor participation, leading to a spike in volatility. Therefore, when establishing a trading plan, remember to account for increased market volatility.
2. Pick the Right Stocks
Selecting the right Muhurat trading stocks is crucial if you’re planning to trade during the special one-hour window. When picking stocks, make sure to consider factors like volatility, trade volume, stock trends and market news.
Also, pay more attention to liquidity since not all stocks may enjoy the same level of trading volume. Fundamentally strong companies and blue-chip stocks are likely to enjoy high levels of liquidity during the session.
3. Employ Risk Management Measures
The best way to protect your positions is to include risk management measures in your Muhurat trading strategy. Consider placing stop-loss orders for every open position during the session. Stop loss will cut your losses significantly if the market moves against you by automatically squaring off your open positions. Similarly, place limit orders at or near your target price to ensure you exit at the right time without waiting for the asset to rise further.
4. Place Small Orders
The Diwali Muhurat trading session remains open for only one hour. You may not be able to place orders with large quantities due to the very short window. And even if you do place them, there’s always the chance of them not being executed fully.
By placing small quantity orders, however, you can ensure that your orders get executed completely. If you wish to expand your position further, you can always place another order during subsequent trading sessions.
Muhurat Trading 2023: Don’ts
Being aware of the don’ts is equally important as knowing what you should do during Diwali. Let’s take a quick look at some key things you should refrain from during the one-hour special session.
1. Don’t Overtrade
It is easy to get carried away when trading intraday during the Muhurat session. The high levels of volatility combined with the excitement of the festive season may prompt you to place more trades than necessary. However, it is important to remember that overtrading can quickly lead to losses since it makes managing individual trades a lot harder and can even increase your transaction costs considerably.
2. Don’t Use Market Orders
The Diwali Muhurat trading session is most likely to be volatile due to increased investor participation. High market volatility can lead to wild swings in the price and may create gaps in the price movement. Using market orders to buy or sell can result in trades at unfavourable prices. A better idea would be to stick to limit orders where you can control the price at which the trade is executed.
3. Don’t Follow Rumours or Unverified Trading Tips
The days leading up to Muhurat trading may be rife with rumours, unverified trading tips and speculations about stocks. It is important to not fall for such tactics. Every trading or investment decision you make must always be backed by thorough research of your own. This will ensure that you make well-informed decisions.
Conclusion
Now, it is important to keep in mind that Muhurat trading is only conducted to pay homage to a long-standing tradition. Trading or investing during this period doesn’t guarantee profitability. Furthermore, it is essential to approach the session with the same level of caution and strategy as any other trading day.
Furthermore, to upgrade your Muhurat trading this Diwali, we at Samco Securities have developed a unique tool. We bring you a web AR filter that transforms any Swastik symbol — a sign of prosperity — into an opportunity to discover Samco's top picks for Muhurat trading. Simply scan any Swastik symbol in your vicinity to unlock Shubh Sach and unseen insights during this auspicious trading window. This innovative approach — which connects tradition with technology — provides you with a curated selection of stocks to consider for your Muhurat trading session.
Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - grievances@samco.in Research Analysts -SEBI Reg.No.-INHO0O0005847
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