Diwali Muhurat Trading 2023: Timing, significance, history & strategy for Samvat 2080

Indian stock markets have grown rapidly with time, thanks to improving technological advancement and more investor participation. At the same time, the stock exchanges have stayed connected to its cultural roots of Muhurat Trading, which takes place on the Diwali eve, marking the beginning of traditional Hindu accounting year, called Samvat.

This Diwali, that is November 12, 2023, will mark the beginning of Samvat 2080. Stock bourses- BSE Ltd and the National Stock Exchange (NSE)- have announced the customary one-hour special 'Muhurat Trading' between 6.15 pm to 7.15 pm, even as the festival falls on Sunday.

The symbolic ritual of Muhurat Trading is being followed for about six decades as it is considered as a good omen to buy stocks to propitiate Goddess Lakshmi, Indian deity to create future wealth and prosperity. Muhurat trading is considered as an auspicious time to seek her blessings throughout the Samvat year.

The folklore suggests that on the night of Lakshmi Pooja, the goddess comes to reside at the place where she is propitiated. That is the reason why traders, shopkeepers and other commercial players stay awake with light on and candles-lamps buying to welcome the Goddess anytime she chooses to come.

Market experts suggest that investors should focus on quality and diversification. However, given the short duration of Muhurat trading, liquidity is also a big factor. Especially for intraday traders, choose stocks with sufficient liquidity to ensure smooth execution of trades.  

Over the past ten Muhurat trading sessions, seven instances concluded with positive returns, highlighting the auspicious nature of the occasion for market participants, said Harjeet Singh Arora, Managing Director at Mastertrust. Look for companies with strong fundamentals, positive earnings reports, and growth potential, he said.

"Meticulous planning is imperative, particularly within the short time frame of Muhurat trading. We have to clearly outline our financial goals whether we are looking for short-term gains or long-term investments," he added. "Risk management is a highly important part and risk appetite varies from individual to individual."

The upcoming year is likely to be a tough one for the domestic equity markets considering the global economic health, interest rate fear, general elections in India and geopolitical issues across the globe. However, the long-term view remained positive as the liquidity remained high.

Also read: Stock recommendations for November 10, 2023: RR Kabel, BHEL and Exide Industries

Proper asset allocation, with proper diversification and periodic rebalancing of the portfolio, must be maintained at all times. It is important to invest in equity over a long period of time and there should be little focus on one-year's returns from Muhurat to Muharat, said Mukesh Kochar, National Head of Wealth at AUM Capital.

"The main thing is that in order to avoid short term volatility, you need to start building your portfolio soon and investing regularly for a longer period.  In this market scenario, we love the multicap strategy. The large cap component in the multicap strategy provides stability for a portfolio, while mid-and-smallcap acts as an incentive to achieve performance," he added.

The market is poised to sustain its prevailing bullish momentum into Samvat 2080 in light of mounting fundamental tailwinds. Equity markets have remained volatile both in India and globally but outperformed against other asset classes.

Investment in equity and gold should depend on your investment objective, time horizon, and risk profile, but proper asset allocation is required in the portfolio, said Arora  from Mastertrust.

Also read: Diwali 2023 picks: GMM Pfaudler, Advanced Enzymes, Automobile Corporation Of Goa, Sudarshan Chemical among Progressive Shares Samvat 2080 ideas

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