Diwali 2023: Market loves to celebrate; Nifty fell in only 3 of last 15 Muhurat trading sessions

Diwali 2023: Every year, on the auspicious occasion of Diwali, the Indian market opens for a special one-hour trading session in the evening known as 'Muhurat trading'. It is considered as an auspicious time to invest in the stocks, and many traders believe that it can bring wealth and prosperity.

While the market is closed on the day of Diwali, both the BSE and the NSE will conduct the Muhurat trading session between 6:00 pm and 7:15 pm on Sunday, November 12.

The indices have generally performed decently on this occasion even though the trading volumes are pretty low. In the last 15 years, since 2008, 12 out of the 15 Muhurat trading sessions ended in the green.

Last year, Diwali was observed on October 24 and the indices rose around a percent, their highest gain since 2008, led by banking, financial services and IT stocks. In 2022, the S&P BSE Sensex surged 524.51 points (0.88 percent) to settle at 59,831.66 while the Nifty 50 rallied 154.45 points (0.88 percent) to end at 17,730.75. During the one-hour trade, the Sensex touched an intraday high of 59,994.25 while the broader Nifty hit 17,777.55.

The broader markets were also in line with benchmark indices with the mid-cap and small-cap indices ending 0.5-1 percent higher last year.

Among sectors, the Nifty Bank advanced 1.28 percent while the Nifty Financial Services index rose 1.27 percent. Also, the Nifty Auto index jumped 0.78 percent and the Nifty IT climbed 0.70 percent.

The Indian market has followed a similar trend in the past. In 2021, the indices rose 0.5 percent during Muhurat trading, followed by a 0.47 percent gain in 2020, a 0.37 percent rise in 2019, and a 0.7 percent jump in 2018. However, they saw minor losses in Muhurat trading in 2017 (-0.6 percent), 2016 (-0.04 percent), and 2012 (-0.3 percent).

The best Muhurat trading performance till date was witnessed in 2008 during the peak of the global financial crisis. In that session on October 28, 2008, the indices jumped nearly 6 percent, the highest ever in a Muhurat trading session.

It's important to note that since liquidity is very limited on the Muhurat trading day, it is not advisable to buy or sell a lot, but most investors especially new investors, can get started by making token investments in stocks you are interested in, on this auspicious occasion. One must not get influenced by the festival sentiments and should invest only a small amount. In case you are confused regarding where to invest or what to buy, consult your financial advisor.

Let's take a look at how the indices performed each year since 2008 on Diwali day:

Going ahead, experts believe that every decline in the market is likely to present a good opportunity to buy.

"The 3E’s Economy, Elections, Earnings and geopolitical crisis outcomes over the next few quarters would drive the return for the next Samvat year 2080. We believe every decline in the market is likely to present a good opportunity as strong earnings rollover to FY26E will make the markets more attractive compared to the long term averages setting the

goal post for NIFTY50 to scale to 22000+ over the next one year. (19.5 times one year fwd)," said brokerage house Reliance Securities.