Diwali 2023: How should you trade stocks, gold, commodities during special Muhurat session?
- Over the past ten Muhurat trading sessions, stock market indices gave positive returns in seven instances, highlighting the auspicious nature of the occasion for market participants.
Diwali Muhurat Trading 2023: Stock market rules and regulations change over time, but there is one tradition that has survived for long is the six decade-old Diwali Muhurat trading.
Muhurat trading is a one-hour special trading session conducted on the day of Diwali and is considered auspicious for trading in the Indian financial markets. During this session, traders and investors participate in the stock market trading for a short period to seek blessings for prosperity in the coming year.
BSE, Asia’s oldest stock exchange, has been holding Diwali Muhurat trading sessions since 1957. NSE started this tradition since 1992.
This year, the Muhurat trading session will be held on Sunday, November 12.
Over the past ten Muhurat trading sessions, stock market indices gave positive returns in seven instances, highlighting the auspicious nature of the occasion for market participants.
Investors should note that the Muhurat trading session lasts for only an hour and the liquidity in the markets is low. Hence, here are some views by stock market experts on how you should trade and what your strategy should be during the Muhurat trading session.
Muhurat Trading Strategy
According to Harjeet Singh Arora, Managing Director at Mastertrust, 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. Usually, we witness volatile trading sessions hence thorough research is very important before deploying any trade,” Arora said.
He advises investors to look for companies with strong fundamentals, positive earnings reports, and growth potential. Additionally, they can also trade on stocks based on technical studies for short-term trading opportunities.
Also Read: Diwali 2023: Market loves to celebrate; Nifty fell in only 3 of last 15 Muhurat trading sessions
Arora emphasizes the importance of risk management while investing.
“Risk appetite varies from individual to individual, for long-term investment, portfolio risk could be mitigated by proper diversification. Investors are not recommended to concentrate all investments in one stock or sector,” Arora said.
For intraday traders, liquidity is a big factor given the short duration of muhurat trading. Hence, he recommends intraday traders to choose stocks with sufficient liquidity to ensure smooth execution of trades.
Commodity trading
In the commodities market, buying precious metals such as gold and silver is considered auspicious during Diwali Muhurat trading.
Commodity market experts believe investors should look for long term gains rather than betting on short term gains in the commodities market.
“Trading in commodities should be done for the long term. Gold, silver and other metals have given strong returns since last Diwalo. Investors tend to make more money by investing in commodities for the long term,” said Ajay Kedia, Director, Kedia Advisory.
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Gold prices have surged over 20%, while silver prices have rallied around 25% since Diwali last year.
This momentum in the precious metals prices is expected to continue going ahead, according to experts as they believe the fundamentals for these commodities remain supportive.
“Investors can buy metals such as gold, copper and zinc on MCX during Muhurat trading. Among agri commodities, investors can opt for cotton as the fundamentals are strong and the prices are likely to rise going forward,” Kedia said.
Samvat 2080 Outlook
The Indian stock market is set to end Samvat 2079 on a positive note. The benchmark Nifty 50 has gained over 9% since Diwali 2022. Analysts believe that the bullish momentum in the domestic equity market will continue into Vikram Samvat 2080 amid fundamental tailwinds.
“The stage of a bullish scenario is being set by strong corporate performance, overwhelming domestic economic numbers, and growing expectations of the return of the Modi government, known for its pro-business policies. FDI inflows in India stood at $45.15 billion in 2014-2015 which has increased to the highest ever FDI at $83.6 billion in 2021-2022,” Arora said.
Also Read: Diwali 2023: Nifty 50 may see healthy gains in Samvat 2080. Which sectors should you bet on?
The bullish sentiment is further bolstered by the speculation that the US Federal Reserve has concluded its rate hike cycle, a factor contributing to the positive market outlook, he added, suggesting that the investment in equity and gold should depend on your investment objective, time horizon, and risk profile.
Meanwhile, commodity experts see a rally of around 8-11% in gold prices during the new Samat year 2080. They expect silver price to continue its outperformance over gold.
Amit Sajeja, Vice President, Research - Commodities & Currencies, Motilal Oswal Group expects gold prices to range around ₹65,000-67,000 till Diwali next year on the back of strong fundamentals. He expects silver prices to gain around 12% in the new Samvat year.
“Gold prices are expected to rally around 8-10% further, reaching around ₹65,000 per 10 grams level next Diwali. Silver prices may give anywhere around 12% to 13% returns in the next Samvat year. We expect MCX silver price to be around ₹80,000 per kg next Diwali,” Sajeja said.
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.
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