Diwali muhurat trading: Here is what you need to know

Muhurat trading for equities, equity futures and options, currency F&O and commodities will be conducted this year on Saturday, 14 November 2020, for just a short span of one hour.

Hyderabad:India’s most-celebrated festival Diwali marks the beginning of the new Hindu year, or Samvat, and is therefore considered an auspicious day for businessmen and traders across the country to start a new ledger after they pay obeisance to Goddess Lakshmi, the Hindu goddess of wealth and prosperity.

India’s stock markets, too, follow this tradition by providing the investor community with a special one-hour trading window, popularly known as Muhurat trading, on a non-working Diwali day to mark the beginning of the new year for capital markets. Investors widely believe that trading during the Muhurat session brings good luck throughout the year.

Muhurat trading this year for equities, equity futures and options (F&O), currency F&O and commodities will be conducted on Saturday, 14 November 2020. The trading window will remain open from 6:15 pm to 7:15 pm. Below is the detailed timeline for both BSE and NSE:

• Pre-open Muhurat session: 6:00 pm – 6:08 pm
• Muhurat trading session: 6:15 pm – 7:15 pm
• Block deal session: 5:45 pm – 6:00 pm
• Call auction: 6:20 pm – 7:05
• Post-closing Muhurat session: 7:25 pm – 7:35 pm

Notably, the market will remain closed on the next day of Muhurat trading to celebrate Diwali. So stock settlement for trades during the session will happen only on 16 November. This means investors would be able to sell the stocks purchased on the Diwali day only on or after 17 November when they get the delivery in their Demat accounts.

Many brokerage houses also roll out special offers for their clients for the Muhurat trading session. Like Zerodha, one of India’s largest and most popular stockbrokers waives off all brokerage charges for this session. “Zero brokerage on all Intraday, F&O, and commodity trades,” it said on its website.

Muhurat session is also considered to be the most auspicious time for new investors to place their first trade order. It is also relatively a safer day for new players as trade is more or less stable during the session with little chances of volatility.

In fact, data shows that in the past 15 Muhurat trading sessions, the stock markets traded in the green and closed higher on 11 occasions, as noted by brokerage house Angel Broking Ltd. In 2019, the Sensex had risen nearly 200 points during the Muhurat trading session.

So, with the markets now having recovered from the damage caused by the coronavirus-induced slowdown, the Muhurat trading session this year might prove to be the right time for stock market investors to restart with a renewed portfolio strategy.