Muhurat Trading 2022
Diwali is one of the most auspicious times of the year. Celebrated across the length and breadth of the country, the festival of light is a good time to purchase new things, including household items, vehicles, and electronics. It is also an excellent time to start your financial journey and make new investments. This notion is the genesis of Muhurat Trading.
What is Muhurat Trading?
The term ‘Muhurat’ refers to an auspicious time where planets are in perfect alignment. It is believed that investments made during this period will yield superior returns. In line with this tradition, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) conduct a 1-hour special Muhurat trading session every year. This year, Muhurat trading will be held on 24th October 2022 from 6:15 pm to 7:15 pm.
History of Muhurat Trading
Diwali marks the beginning of the Hindu calendar year. It is also the commencement of a new accounting year for the trading community. On the auspicious day of Muhurat, the trading community conducts Chopda Pujan to worship goddess Lakshmi. The tradition also involves worshipping books of accounts called bahi-khatas wherein old books are closed, and new books of accounts are opened.
To commemorate the auspicious Diwali muhurat, BSE started the practice of Muhurat trading in the year 1957. The National Stock Exchange also replicated this tradition in 1992. In honor of Muhurat trading, investors make symbolic trades and buy long-term stocks for their loved ones.
What Happens During Muhurat Trading?
The 1-hour special muhurat trading session is split into 5 parts:
1. Block-deal session:- This 15-minute session precedes the actual muhurat trading session. Here, corporates like mutual funds, pension funds etc. buy and sell pre-determined quantity of shares at a fixed price.
2. Pre-opening session:- This session lasts for 8 minutes and serves as an interval period where order can be placed by even retail investors. The idea is to arrive at the respective equilibrium prices of each securities eligible for trading during the Muhurat trading session.
3. Muhurat trading session:- This is the hour-long session during which regular trading takes place.
4. Call auction session:- Low-volume, illiquid stocks are traded during this session.
5. Closing session:- During this session, orders are placed at closing prices of respective securities to get final execution in Equity segment.
6. Trade modification cut-off time:- Trades placed during pre-market and muhurat trading can be modified in this session.
Muhurat Trading Timings 2022
The following table is a succinct summary of the timings for muhurat trading 2022.
|Block-deal session||5:45 pm to 6:00 pm|
|Pre-open session||6:00 pm to 6:08 pm|
|Muhurat trading session||6:15 pm to 7:15 pm|
|Call auction illiquid session||6:20 pm to 7:05 pm|
|Closing session||7:25 pm to 7:35 pm|
|Trade modification cut-off time||6:15 pm to 7:45 pm|
Do’s and Don’ts of Muhurat Trading 2022
- All intraday positions will be squared-off post 7:00 pm on Muhurat trading
- Stocks bought under product type, eMargin or INVEST on Friday i.e., 21st October 2022 will not be available for selling on 24th October 2022 (as it is a settlement holiday). However, trading limit shall be reduced as per margin applicable for respective product type.
- Intraday profits made in Equity segment on 20th & 21st of October 2022 will not be available for trading on 24th Oct ‘22. Further, any MTM (Mark to market) profit or premium received in Derivates segment on 21st Oct '22 will not be available for trading on 24th Oct'22 as it is a settlement holiday.
- Since 24th Oct is a settlement holiday and 26th Oct is a trading holiday, funds pay-out initiated post 9:30 pm on Friday, 21st Oct will be processed on the next banking day i.e. 25th Oct and will reflect in your bank account on 27th Oct. To avoid delays, place your funds pay-out request before 9:30 pm on 21st Oct ‘22.
- The credit for sale proceed against stock sold on 24th Oct'22 will not be available for any further limit on Mahurat Trading.
Who can Benefit from Muhurat Trading?
Muhurat trading session is an excellent time to invest. During Diwali muhurat trading, the market is usually bullish. But since the session is restricted to just 1 hour, trading volumes are low. Hence, you should avoid trading in stocks with low liquidity. Traditionally, investors buy fundamentally strong stocks for the long-term during Muhurat trading.
How Muhurat Trading Influences the Market?
Since muhurat trading takes place on the day of Diwali, it carries substantial sentimental values for Indian traders. While the trading volumes are limited, the market has historically (80% of the time) turned positive post Muhurat trading. Typically, Indian stock exchanges close on a high note at the end of the Muhurat trading session.
If you have never traded in the stock market, then there is no better time to start than on the auspicious occasion of Muhurat trading.