Muhurat Trading 2022: Everything You Should Know

It’s that time of the year again. Yes, the time of Diwali which the investor community keenly waits for. Diwali is an auspicious time as per the Hindu calendar and the customary Muhurat trading is being followed by investors and trading for many years. So, what exactly is Muhurat trading?

Before we dive into the concept, let’s first break up the two words and look at the term Muhurat.

The word Muhurat, is a Hindu measurement of “time”. According to Hindu customs, this time is considered auspicious for a new beginning as its when the planets are aligned in a way that would yield good returns.

According to the Hindu calendar, the new year starts on Diwali for many households in India. Therefore, Muhurat trading signifies that any sort of investing or trading at that time will give positive results. Even though the Indian Stock Exchanges remain closed on this day, it remains open for an hour (known as the trading window) during the day for traders to invest in shares or place their trades at this auspicious time. This period is usually in the evening of Diwali. In India, Muhurat trading will take place on October 24th, 2022.

History of Muhurat Trading

The new year starts on the day of Diwali for the trading and business communities in India. Traditional stockbrokers would open new settlement accounts for their clients and close the previous year’s balance sheet on this auspicious time, which is the Muhurat. The broking community also performs the ChopdaPujan in which they worship their books of accounts. They pray to Goddess Lakshmi for wealth, prosperity, and success on this day.

The tradition of Muhurat trading was initiated by the Bombay Stock Exchange in the year 1957.

1992 onwards the National Stock Exchange conducts it on Diwali. Nowadays, it’s become a norm for individual traders to trade on this special occasion.

What occurs at the time of Muhurat Trading?

The respective stock exchanges, BSE & NSE permit trading for a limited time period on Diwali. Unlike the other weekdays, the Muhurat trading window is open only for an hour at a pre-decided time. This session is typically divided into the following two parts.

Block Deal Session –

In this case, two parties (Buyers & Sellers) agree to buy or sell a security at a fixed price and inform the stock exchange about the same.

Pre Open Session –

Here, the stock exchange determines the equilibrium price which lasts for eight minutes. It’s the actual one-hour trading session which is similar to the regular market sessions

Call Auction Session –

In this session, illiquid securities are traded. Securities are termed “illiquid” once they satisfy the criteria set by the stock exchange.

Closing Session –

Here, investors and traders can place ma arket order at the closing price.

Muhurat Trading Timings 2022

The Muhurat trading timings are specified by the leading stock exchanges namely, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). This year Muhurat trading will be conducted on October 24th, 2022. They also have issued circulars regarding the same. Trading in the commodity, currency, derivative segment, Equity Futures and Options , and Securities Lending and Borrowing Segment will take place in the same time slot.

Muhurat Trading Session Capital Market (In Hours)
Block Deal Session 17:45 - 18:00 hrs
Pre Open Market Session 18:00 - 18:08 hrs
Normal Market Session 18:15 - 19:15 hrs
Call Auction Session 18:20 - 19:05 hrs
Closing Session 19:25 - 19:35 hrs

Who Benefits from Muhurat Trading?

Diwali is an important time of the year for all sizes of businesses; hence all eyes are on the market trends, especially at this time of the year. It is considered a good time to buy or sell stocks for those who believe in planetary alignments. Also, the trade volumes are high, and the market, bullish, riding on the festive fervor making people optimistic about the stock markets and the economy.

Since Diwali brings wealth and prosperity, it’s a good day to start investing in stocks if you haven’t already. However, a word of caution. If you are new to the world of trading and have never invested before, it maybe wise to just watch the market at the time of Muhurat trading and perhaps make a paper trade for getting a hang of it.

The markets are known to be very volatile during the Muhurat trading session, as the muhurat time is only for an hour. Hence, be very watchful, and make investments in stocks of high-quality companies if you have a long-term investment plan. Experienced traders benefit from this as mostly traders and investors engage in active buying and selling of stocks to honor the day’s auspiciousness.

Experts are hoping that the 2022 Muhurat trading session will turn out well as the year in general has proven to be bad for the economy due to the impact of the pandemic on both business and livelihood. Still, no harm in being vigilant and making trading decisions, using your head.

Things to keep in Mind Before Indulging in Muhurat Trading

However auspicious Muhurat trading maybe, it doesn’t imply that you can put your money in any stock in the hope of making profits. There are a few aspects that you must consider before you start buying and selling stocks during this Diwali day trading time. Let’s take a look.

  • Muhurat trading session for the year 2022 will happen on October 24th from 6:15 PM to 7:15 PM.
  • This time of the year is considered to befavourable by most traders and investors. Hence, a lot of them will be sitting in front of their trading screens.
  • All open positions at the end of the Muhurat trading session will result in settlement commitment.
  • It’s imperative for traders to keep an eye on resistance and support levels. Historically, the markets have proven to be volatile during Muhurat trading sessions. Thus, as a day trader, it would serve you well if you kept your resistance and support levels in focus in order to take better trading decisions.
  • If you wish to take advantage of the market volatility during the Muhurat trading session, then ensure that you choose stocks with good trading volumes as the trading window lasts for an hour only.

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