Diwali 2024: Nifty declined in only 3 of the last 16 Muhurat trading sessions

Every Diwali, the Indian stock market marks the occasion with a special one-hour evening trading session known as Muhurat trading. Observed as an auspicious time for investing, this tradition has become symbolic of prosperity, with investors often seeing it as an opportunity to bring wealth and success into their portfolios.

This year, both the BSE and NSE will conduct the Muhurat trading session on Friday, November 1, from 6:00 pm to 7:00 pm. While markets remain closed during the day, this evening session allows investors to make token investments, following a long-standing custom of trading during Diwali.

Historically, Muhurat trading sessions have often brought positive returns, even if trading volumes remain relatively low. Over the past 16 years, the indices have ended in the green in 13 of these Muhurat trading sessions, showcasing the favourable trend this event often brings.

Last Muhurat Session

In 2023, Diwali was observed on November 12 and the indices rose over half a per cent, recording the second-best Muhurat trading gains in five years.

The indices delivered solid returns, with the S&P BSE Sensex closing 355 points higher at 65,259, up 0.55 per cent, and the Nifty50 gaining 100 points to close at 19,525, rising 0.52 per cent. Mid and smallcap stocks outperformed, with the BSE Midcap index climbing by 0.67 per cent and the BSE Smallcap index surging by 1.14 per cent.

Investors witnessed a collective gain in market capitalisation of all companies listed on BSE, which rose to ₹322.5 lakh, adding around ₹2.2 lakh crore in value.

Prominent performers in the 2023 Muhurat trading session included 28 of the 30 Sensex stocks and 43 of the 50 Nifty stocks. Notable gainers included Coal India, UPL, Infosys, and Eicher Motors, which closed as top performers.

Sectors across the board recorded gains, with Nifty IT rising by 0.72 per cent, while Nifty Metal and Realty indices increased by 0.6 per cent each, and Nifty Bank climbed 0.40 per cent to close at 43,996.65.

Muhurat Trading History

Over the years, the Muhurat trading day has consistently reflected positive sentiment. For instance, indices rose by about one per cent in 2022, by 0.5 per cent in 2021, 0.47 per cent in 2020, and by 0.37 per cent in 2019, while recording a 0.7 per cent increase in 2018. Minor declines have also been seen, such as in 2017 (-0.6 per cent), 2016 (-0.04 per cent), and 2012 (-0.3 per cent).

The most remarkable Muhurat trading session occurred during the global financial crisis on October 28, 2008, when the indices jumped nearly 6 per cent, marking the highest gain for the session to date.

Outlook

Despite the auspicious nature of Muhurat trading, experts advise caution. Given limited liquidity on the Muhurat trading day, it is generally suggested that investors, especially beginners, make token investments rather than larger trades. Consulting with a financial advisor can also be valuable, particularly if one is uncertain about which stocks to invest in. Experts often encourage investors not to let festival sentiment drive investment decisions but rather to use the occasion for strategic, long-term gains.

Looking ahead, market analysts are optimistic that any dips in the market can be buying opportunities. This year, Samvat 2081 begins with key global economic shifts. “Samvat 2081 marks a significant year for the global economy, starting amidst a global rate-cutting cycle,” noted Pranav Haridasan, MD and CEO of Axis Securities. He highlighted the US Federal Reserve’s recent rate cut of 50 basis points, with expectations for further cuts by year-end, contrasting with the Reserve Bank of India (RBI) maintaining rates and shifting its stance to ‘neutral’ amid inflationary concerns. Haridasan added, “A rate cut or two could materialise in Samvat 2081, depending on the trajectory of growth and inflation.”

As Indian equities continue to present a strong long-term growth story, Haridasan emphasised that corporate earnings will be essential in driving market returns, given current valuations. “Stock picking with a balance of growth at a reasonable price and quality will be critical to achieving good returns over the coming year,” he concluded, suggesting a strategic approach to maximising returns in the evolving financial landscape of Samvat 2081.

As Diwali approaches, Muhurat trading continues to embody the optimism and prosperity associated with the festival, allowing investors to engage with the market in a tradition steeped in cultural significance and financial aspirations.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.