For every one of us, Diwali marks the beginning of the New Year. Associated with victory and prosperity, it is the time for momentous decisions and high value purchases. While each of the rich Indian cultures celebrate their respective New Year, throughout the calendar year, Diwali commonly marks the start of the new financial year across each business, culture or geography.
For the Indian stock markets also, Diwali represents the most auspicious time of the year. With festivities in the air, there is also hope and aspiration for a better and more profitable year ahead. To ensure that this aspiration does become actual reality, Indian stock markets celebrate a time honoured tradition – the Muhurat Trading.
As the name suggests, Muhurat Trading basically means trading within a pre designated auspicious time. Each year, the BSE and NSE Stock Exchanges earmark an hour on Diwali to welcome wealth and prosperity. The session happens for an hour in the evening and is considered extremely propitious.
Muhurat Trading also ensures a positive run for the Exchanges. The trades are nominal, usually bought as a token to celebrate; and intraday profits, however small, are always booked. The hour usually ends with the Sensex and Nifty notching up profits, however small they may be. Infact, the sensex has ended trading on Muhurat day with positive returns 8 times in the last 10 years. This year, also known as Samvat 2069 as per the Hindu calendar, Muhurat trading will happen on November 13, 2012 starting at 3.30 pm and ending an hour later – at 4.30 pm.
What does this mean for Investors? It's an opportunity for you to participate in a time honoured tradition and effectively start your financial year on a positive note. Consider this to be akin to purchasing your new car or your investment in any property. Muhurat Trading is also the perfect time for first time investors to make their foray into the stock markets, with recommended stock picks and small amounts of capital investment. The high from Mahurat Trading could be followed with a low, but if the stock is good and you stay invested, you will surely gain.
For newcomers, place your first trades during Mahurat Hour as the trades are token and nominal. Thereby, while the trade itself ensures the auspicious start to your foray into the Markets, the small capital investment will ensure that you take your time to better understand the markets and build your portfolio steadily over a period of time.
However, whether as veteran investors or newbie rookies, do remember to base your decision on sound research and advice to ensure a strong fundamental base for your portfolio. Once you have traded, remember to stay invested in the medium to long term to ensure that you book profits from your holdings.
This is also an extremely good time to choose your financial advisor or broker to better discipline and achieve your financial goals. However, do pay heed to his advice to make the most of what the Indian markets have to offer.
This year, Mahurat trading is expected to see a range of 5,600 - 5,800 and trades above 5,800 levels are expected to confirm the uptrend in the Indian Indices.
Come November 13th, we wish you a happy Diwali and also a Happy Hour of Investing!
Dipen Shah, Head of PCG (Private Client Group) Research, Kotak Securities
Kotak Securities Limited (KSL) may have proprietary long/short position in the above mentioned scrips and therefore should be considered as interested.
Analyst holding: Nil.
The views provided herein are general in nature and do not consider risk appetite or investment objective of particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with KSL.