Muhurat trading is a one-hour special trading session conducted on the day of Diwali, the Hindu festival of lights. It is considered auspicious to trade in the financial markets on this day, as it is believed to bring wealth and prosperity in the coming year.
History of Mahurat Trading
The tradition of Muhurat Trading was initiated by the Bombay Stock Exchange in 1957 and was later adopted by the National Stock Exchange in 1992. Today, Muhurat trading is a major event in the Indian financial markets, with millions of traders participating each year.
Traditionally, the Diwali festival marked the beginning of the new financial year for stockbrokers. They would open new settlement accounts and perform a ritual called Chopda Pujan to worship their account books.
Marwari merchants typically sold stocks during Muhurat trading, believing that money should not enter their homes on Diwali. Gujarati traders, on the other hand, were enthusiastic buyers.
Muhurat trading is a unique tradition in the Indian financial markets. It is a way for traders and investors to mark the beginning of the new financial year and to seek blessings from the goddess Lakshmi.
Timing for Mahurat Trading
Muhurat Trading 2023 on NSE and BSE is to be held on November 12th from 6 pm to 7:15 pm, including a 15-minute pre-market session. Here is the detailed timetable,
|Block Deal Session||5:45 PM to 6:00 PM|
|Pre-Open Session||6:00 PM to 6:08 PM|
|Muhurat Trading||6:15 PM to 7:15 PM|
|Closing Session||7:25 PM to 7:35 PM|
|Call Auction Session||6:20 PM to 7:05 PM|
During Diwali, both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) allow trading for a limited duration.
Block Deal Session: During Muhurat Trading it is a specific segment where large quantities of shares are traded as a single block. Block Deal Session adds another layer to the Muhurat Trading experience, providing a platform for substantial transactions to be carried out seamlessly and ensuring a smooth flow of trading activities during this auspicious period.
Pre-open Session: This is where two parties mutually agree to buy or sell a security at a predetermined price and subsequently inform the stock exchange about the transaction.
Muhurat Trading Session: The main event, lasting for one hour, during which the majority of trading activities occur.
Closing Session: In this phase, traders and investors can place market orders at the closing price, concluding the Muhurat Trading session.
Call auction Session: It is where illiquid securities are traded. Security is termed illiquid if it satisfies the criteria set by the exchange.
NSE & BSE Mahurat Trading Turnover Data:
|TURNOVER (in Rs Cr)|
|24-Oct-22 (Mahurat Trade 2022)||3,772.49||5,572.36|
|04-Nov-21 (Mahurat Trade 2021)||3,637.06||8,510.16|
|14-Nov-20 (Mahurat Trade 2020)||5,189.38||10,833.67|
As the turnover trend appears to be declining in Mahurat trading, the question arises: Is this auspicious event losing its significance?
The answer may be that the daily turnover of the cash market segment is decreasing not only for Mahurat trading but also in everyday trades. All the money is flowing to the modern financial instruments known as the Future and Options segment. So, this could be the reason that we see a decline in turnover and an increased turnover in the Future & Option segment. On the day of Mahurat trading, the trading session lasts only for an hour. The Future and Options segment has enabled traders to earn more returns in less time, so the volume of traders is shifting from the cash segment to the Future & Option segment.