Mumbai: The Bombay Stock Exchange (BSE) will be lit up as usual this Diwali to celebrate the Hindu new year, Vikram Samvat 2065, but traders here say that things aren’t looking as bright as they were last year. Or the year before.

Asia’s oldest exchange, the 123-year-old BSE, has been celebrating the festival of lights for at least half a century. Brokers worship the Hindu goddess of wealth, Lakshmi, and traditionally make token buys at the one-hour muhurat trading in the evening.

This year though, the exchange is “toning down decorations" and using fewer lights, said a BSE spokesperson, because of the state of the markets.

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The exchange’s benchmark Sensex index has lost 57% of its value so far in 2008, and 53.56% since the previous Diwali, marking the worst period for the Indian equity market in at least 10 years. The Sensex dropped to 8,701.07 points on Friday from 18,737.27 on 12 November 2007, the first working day after last year’s muhurat trading.

To be sure, muhurat trading has lost some of its sheen in recent years because of the dominance of foreign institutional investors (FIIs) and with electronic trading replacing the open outcry system.

But with FIIs pulling out at least $12.2 billion (about Rs60,700 crore) this year to feed cash-starved operations in their home countries and domestic investors more than making up for this, there was hope that muhurat trading would regain some of its traditional significance.

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That seems unlikely now. Brokers and market participants Mint spoke with uniformly presented a picture of dejection.

The gloom is unprecedented, said Kisan Ratilal Choksey, managing director of brokerage Kisan Ratilal Choksey Shares and Securities Pvt. Ltd, and an equity trader for at least three decades.

“This time it will be dismal," he predicted.

“It’s very hard to be cheerful and happy" this festive season, said Hemang Jani, senior vice-president, advisory, at brokerage Sharekhan Ltd, which has around 750,000 clients. “All the enthusiasm has gone."

Mahesh Gupta, 29, who runs a stock broking franchise in Kolkata, expects only 10% of his usual clients to trade this Diwali. “Many people’s capital has been wiped out and they are swearing never to invest in shares again," he said.

Incidentally, Samvat 2064 too had started off on a bad note. The Sensex had closed 0.79% lower after muhurat trading on global cues and rising crude oil prices.

Trading volumes on Diwali have also been declining in the past few years, from 10.1 million shares in 2003 to 4.75 million in 2007.

Traders traditionally place buy orders on Diwali and the Sensex typically performs better post-festival. But with Diwali just a day away, investors aren’t too sure yet of their plans.

“I’m not recommending investors whether to buy or not," said Raamdeo Agarwal, joint managing director of brokerage Motilal Oswal Securities Ltd. “After five years of party, it’s time to clean up the place. That’s part of the deal."

For brokerages, Diwali this year is a low-key affair. Most of them have scaled down celebrations, gifts and bonuses.

Senior executives at financial services firm India Infoline Ltd, whose tag line reads, “It’s all about money, honey!", said they are not taking home their bonuses this Diwali, which in previous years was a month’s salary. The executives did not want to be named.

Another executive of a large retail brokerage, who also wished to remain anonymous, said that at a Diwali party last week, his company’s top brass gave motivational speeches and asked everybody to “brave it together" in the coming year, expected to be tougher than the one gone by.

“The broader sentiment is shock," said a senior executive at a large foreign brokerage. After Friday’s shock, bursting crackers or partying are the last things on anybody’s mind, he added.

Nesil Staney contributed to this story.