Diwali is just a day away and marketplaces have been witnessing a boom as consumers are into shopping sprees to celebrate the auspicious occasion with fervor and gaiety. Even as most of the consumers are done with the shopping, a special window of shopping will open tomorrow on the day of Diwali in the stock market where people will get money making opportunities through buying and selling of shares of different companies.
Actually the special window is the one-hour Muhurat Trading session held in the Indian stock markets on the auspicious occasion of Diwali where investors are given the opportunity to make profits by investing and trading. Muhurat Trading, which ushers in the New Year, is a decades old tradition practiced with a lot of faith and enthusiasm. Investors have fervent belief that it will bring prosperity for the duration of the year and yield delightful returns.
To be precise, it is an old belief that by doing trade during Muhurat trading time, a trader or investor will earn wealth and prosperity the whole year. This session is mostly held during the evening and most of the traders buy stocks during this time. Most of the traders trade during this time for religious, sentimental and traditional reasons.
Since Muhurat trading is considered to be quite auspicious to invest one ‘s money, it is also known as the most auspicious time for a new trader to do their first trade. One gets to understand the market and can experiment with a small investment. Once a thorough understanding is gained, traders can invest by picking up the best stocks.
We have witnessed that millions of first-time investors have boarded the equity (share) markets in the last couple of years and most of them are youngsters in the age group of 18 to 35. It’s even interesting to see students showing an appetite to invest in a small way in a cross section of shares to reap benefits of the surging markets.These first-time investors will be enthusiastic to explore the Muhurat trading opportunity to make quick money.
Even as there is no concept of Muhurat Trading anywhere in the world, this time the timing of the special one-hour trading session is coinciding with the timing of the US market. Muhurat Trading begins at 6.15 pm on October 24, while US stock exchanges open for trading at 7 pm (IST).
So, the Indian investors during the Muhurat Trading session on Indian stock markets, can also trade on international brokerage platforms and buy US stocks and ETFs. Notably, shares of Apple, Amazon, Tesla, and many more are popular among Indian investors.
Market experts believe Muhurat Trading coinciding with the timing of the US market is an opportunity for the Indian investors to make money. Currently, US stocks are in a bear market and some quality companies are having lower valuations. Here lies the opportunity for the Indian investors to capitalize on the US bear market.
What exactly is Muhurat Trading?
As already stated, Diwali Muhurat Trading session is held in the Indian stock markets only. The brokers used to open the new settlement accounts for all their clients on the day of Diwali during the Muhurat trading session. The same tradition is followed today where investors purchase shares of the good companies so that they can hold them for long-term gains. Remarkably, Muhurat trading makes an investor focus on quality shares and to invest with long-term goals.
Bombay Stock exchange (BSE), initiated the ritual of BSE Muhurat Trading in 1957. The Diwali Muhurat Trading in the National Stock Exchange (NSE) has been conducted since 1992. Muhurat Trading time is ideal to buy and sell stocks due to the high trading volume.
It is considered a good time for both experienced and new investors and traders to profit from Muhurat Trading sessions. However, it is advisable to be vigilant as a new trader. Experienced day traders can benefit from this session as most investors/traders are buying or selling shares to acknowledge the day’s auspiciousness.
What are precautions to be taken while exploring the Muhurat trading window?
Investors have fervent belief that Muhurat trading brings them a lot of profit as Sensex would have a bullish trend. so, many buy and sell the stocks on the same day. However, while doing so, one has to be cautious as there are Muhurat trading sessions where the Sensex has seen a loss. Also, there are times when the Sensex has dipped on the day after the festival.
The best thing for any investor is to lookout for good company stocks that are showing high returns or good cash flows to invest.
What are the things which new investors should follow on the Muhurat trading day?
They will come across unsolicited emails and messages containing trade ideas to buy or sell shares. But they need to be careful about what they act upon. Trading with herd mentality and blind faith even on an auspicious day might lead to losses. Since the Muhurat trading window is open only for an hour, it makes sense to research the stocks well in advance before investing. Don’t forget to invest in stocks of different sectors to mitigate risk of losses as stock investing is loaded with high risk.
What is the difference between investing and trading?
It’s important to understand that being an investor is entirely different from being a trader in the share market.You are a trader when you buy a stock because you feel like making profits out of the price movement of the stock. You sell and buy stocks without having real interest in the company behind the stock. As a trader your focus is entirely on the performance of the stock rather than the company behind the stock and don’t hold them for a long time.
If you buy shares on the basis of performance of the company believing long term growth potential, then you are an investor. Here the goal of investing is to gradually build wealth over an extended period of time through the buying and holding of a portfolio of varied stocks for a period of years, taking advantage of bonuses like interest, dividends and stock-splits along the way. Notably, market dynamics suggest either be a trader or an investor. Don’t be both with the same stock.
What is share trading addiction?
If an investor is unable to control stock trading, it’s simply an addiction. In order to clear yourself as not a trading addict, you should ask yourself a few questions. Do you enjoy the challenge of trading even more than making money? Are you a big risk-taker? Are you willing to put large sums of money on a few stocks, depending on margins and on other credit lines for investing? Do you resort to bigger risks to erase your losses? Is it that the first thing you do when you get up and the last thing before you go to sleep is check the position of your stocks? Do you bet large portions of your investment portfolio on a few stocks?
If your answer to these questions is affirmative, then treat yourself as a victim of online trading addiction. Precisely, it’s an illness.
I haven’t seen people talking about this kind of affliction, but the addicts suffering from uncontrollable online stock trading are no less serious than what ails the gambler who can’t stay away from gambling. While talking in the local context, I have seen online traders here who do nothing else but remain busy in trading stocks and their tendencies are of a compulsive gambler.
How can one get rid of addictive trading?
First and foremost thing is to identify yourself as an online trading addict. Then the next step is harder, as you need to acknowledge that you need help for de-addiction. Don’t hesitate to seek help. However, it’s possible that once you identify yourself as a trading addict, you can help yourself in the self de-addiction process through will power. Further, stepping away from the stock market for some period and divorcing the market specific news as much as possible will strengthen effective dealing with addictive trading.
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.