Sensex has a sweet tooth on Diwali Muhurat trading days, shows 10-year history

The sheer auspiciousness related to buying stocks on Diwali Muhurat trading day has made the once-in-a-year special session short but sweet for Dalal Street traders. In the last 10 Muhurat trading days, Sensex has given positive returns eight times as both traders and investors indulge in token buying.

Last year's Diwali was the best in recent years with the index ending 524.5 points higher while the worst Muhurat day was in 2017 when Sensex ended 194 points lower. The other year when the equity benchmark fell was in 2016.

All the last five Muhurat trading days have made Diwali happier for bulls.


"Usually, we witness volatile trading sessions on Diwali. Hence, thorough research is very important before deploying any trade. Given the short one-hour duration of Muhurat trading, liquidity is also a big factor. Intraday traders must choose stocks with sufficient liquidity to ensure smooth execution of trades," said Harjeet Singh Arora, Managing Director at Mastertrust.

Besides the bullish seasonality seen during the festival, analysts are also pointing out that the market generally performs positively ahead of Lok Sabha elections. In the last 25 years, Sensex has never given a negative return six months before the election.

"The average gains of Nifty during these five elections is 26.4% six months prior to the results are announced. The highest returns were before the 2009 elections results with 61.1%. The lowest return was of 8.7% in 2004 elections. With US bond yields hitting a roadblock of 5% and only six months remaining for the election results we are poised for yet another upmove," Apurva Sheth, Head of Market Perspective, SAMCO Securities, said.

His recommendation is to buy Nifty Bees during the Muhurat trading session.

While the market would be closed for normal trading on Diwali, which is also a Sunday, a special one-hour trading session would be held from 6:15 pm on both BSE and NSE to mark the beginning of Hindi accounting year Vikram Samvat 2079. Trading volumes are usually thin amid token buying.

The post-Muhurat trading session, however, hasn't usually been as kind as the index has fallen six times in the last 10 years.

"Market participants normally prefer to buy quality stocks on Muhurat day which they are most likely to hold on to for a few months. The selling that we see on the following day is typically because of the news flow and global market action on that day and not because of traders selling stocks they purchased on Muhurat day. Hence, traders must take a fresh view on Monday when the market opens for a full day of trading," Sheth said.

A.R Ramachandran of Tips2trades suggests that one should not buy stocks just because it is an auspicious day. "Trade keeping in mind the stock's fundamental and technical aspects," he said, adding that with a majority of the companies having announced their Q2FY24 results, current geopolitical tensions along with crude prices will determine the next phase of the market.

(Data: Ritesh Presswala)

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)