Every Diwali, the stock market opens for just an hour and this special event is called Muhurat Trading. This year, it is happening on 1st November 2024, which also marks the beginning of Samvat 2081 as per the Hindu Calendar. It is considered a significant occasion as many traders and investors believe that investing money during this time brings good luck and prosperity. That’s why there is always excitement about Diwali trading. But you cannot jump in without a well-prepared trading plan. You should know what to do to align your investments with your financial goals.
So, with this guide, we will look at the steps you need to take to set up your stock trading plan for Muhurat 2024. In this blog, we will also cover the historical significance of Muhurat Trading, how to review the past year's market performance, and major strategies and tips to follow.
Historical Significance of Muhurat Trading
Muhurat trading is a significant stock market tradition in India and has a history dating back to 1957 at the Bombay Stock Exchange (BSE). However, it is now followed by the National Stock Exchange (NSE) as well. In Hindu tradition, the word "Muhurat" refers to an auspicious time, and it is widely believed that trading during this time brings good luck and financial prosperity. Consequently, a special one-hour trading session takes place every Diwali. Traders partake in Muhurat Trading not just to make profits but also to honour the tradition.
What Happens During Muhurat Trading?
During Muhurat Trading, as mentioned earlier, the stock market opens for one hour in the evening as per the timings announced by the NSE and BSE. This year, the Mahurat Trading session is scheduled to take place on November 1, 2024, from 06:00 PM to 07:00 PM. Now, this Diwali trading session is divided into multiple segments and here’s a breakdown of that:
- Pre-Open Session (05:45 PM to 06:00 PM): This happens before the actual trading starts, where the market opening prices are determined.
- Normal Market Session (06:00 PM to 07:00 PM): The main event where the majority of trading happens.
- Closing Session (07:10 PM to 07:20 PM): After the trading hour ends, traders can place market orders at the closing price.
During Muhurat Trading, you can invest in equity, commodity, currency derivatives, and more. There is no doubt that the market sentiment is generally positive during this time, but make sure you plan your trades carefully.
Review Samvat 2080 Performance
Yes, just because this is an auspicious time, you cannot take a blind plunge. Before you consider Muhurat Trading for Samvat 2081, ensure you review how the market performed in the previous year, Samvat 2080. This way you would be able to get valuable insights into what worked and what did not. You can consider the following to review the previous year's performance:
- Stock Market Trends: Do analyse the trends of major indices like the Nifty and Sensex. Check if the market experienced significant growth or volatility.
- Sector Performance: Look at which sectors performed well and which ones lagged behind. With this, you would be able to decide which sectors to focus on during Diwali trading.
- Your Portfolio: Of course, you should check how your investments performed in Samvat 2080. Did you meet your financial goals? Check if your stocks underperformed or overachieved.
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Strategies for Muhurat Trading
You need to have a well-thought-out strategy to achieve success in the stock market. So, do consider the following simple strategies to make the most of your Muhurat Trading 2024:
- Buy and Hold Strategy: If you think the company would grow in the long term, then use Muhurat Trading as an opportunity to buy shares and hold them for the long haul.
- Portfolio Rebalancing: You can also use the Muhurat Trading session to rebalance your portfolio. If certain stocks have underperformed, you can consider selling them and reinvesting in stronger companies.
- Diversification: It goes without saying that you should not put all your money into one stock or sector. So, diversify your investments across different sectors to reduce your risk.
Align Your Plan with Financial Goals
To grow your investments, it is important to align your trading plan with your financial goals. When you don’t have a connection between these two, it will become difficult for you to achieve your long-term objectives. So, here’s how you can align your trading plan during Muhurat Trading 2024:
- Identify Your Goals: Understand if you are saving for retirement, a house, or your child’s education. The better you understand your financial objectives, the better investment decisions you can make during Diwali trading.
- Risk Tolerance: It is also important for you to know your risk tolerance before you start trading. If you are uncomfortable with high-risk investments, focus on more stable blue-chip stocks. On the other hand, if you are okay with risks, you can consider investing in growth stocks with higher potential returns.
- Monitor Your Investments: Make sure to keep an eye on your investments. Check if they continue to perform in line with your goals.
Things to Keep in Mind for Muhurat Trading
Many people invest their money during the Muhurat Trading session to honour the tradition. However, there are things you should keep in mind before you go for it:
- Market Volatility: The stock market can be unpredictable, even on an auspicious day.
- Liquidity Issues: As the trading session is short, liquidity may be limited, and hence, there may not be enough buyers or sellers for certain stocks.
- Do not make emotional or impulsive decisions as it may result in money loss. Always stick to your plan.
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Conclusion
Muhurat trading is your golden opportunity to kickstart your financial year on a high note! Make sure you have the right plan so you can make it a memorable and successful day for yourself as well as your investments.
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