Diwali 2022: Dos And Don'ts For This Muhurat Trading Session

Muhurat trading is a popular custom followed every Diwali. Read on to know a few ‘dos and don’ts for this year’s trading session.

<div class="paragraphs"><p>Source: Alexis Fauvet on Unsplash&nbsp;</p></div>
Source: Alexis Fauvet on Unsplash 

The Muhurat trading session is an old tradition that has been followed for more than six decades now. On the day of Diwali each year, the stock markets open for just one hour and any traders or investors who wish to buy, sell or trade in the stock market can do so within this one specified hour. Diwali is considered to be a holy occasion, and the term ‘Muhurat’ translates to ‘an auspicious time’, so traders consider this Muhurat trading session to be an auspicious occasion to make new investments and start new accounts for their customers. However, if you are an investor looking to make trades during the Muhurat trading session, there are some important things that you should keep in mind.

Muhurat Trading 2022: Dos And Don’ts

In the excitement of the Muhurat trading session when the prices of stocks tend to rise, investors are prone to making impulsive purchases that may not be the best long-term stocks for their portfolios. In the eagerness to be a part of Muhurat trading and buy trending or rising stocks may not be the right investment choice. Keeping these points in mind, we have compiled a set of dos and don’ts that you should follow on Diwali Muhurat Trading 2022:

Pick Fundamentally Solid Stocks: If you’re looking to make investments in the stock market on the day of Muhurat trading, the most important thing is to only select the stocks of companies that have strong fundamentals. Focus on well-established companies that offer the best chance of long-term returns. One more factor that you should look into is any stock’s past performance and how consistent it remains. 

Do Your Own Research: During the time around Muhurat trading, you will most likely receive tons of suggestions from your friends, social media, acquaintances, etc. However, these stock suggestions may not always be well thought-out, even if they are well-intentioned. In this case, it’s very important that you analyse and research deeply about any stock suggestions that you are provided, and not make any investments blindly without looking into the companies. 

Beware Of Market Volatility: While the stocks generally perform well during the time of Muhurat trading and remain positive, there have also been years when the Sensex has gone down on Muhurat trading day instead of going up. Moreover, due to the very large volumes that will be traded within a single hour, there is bound to be high volatility when it comes to the prices of stocks. If you are going to make any investments on Muhurt trading day, they should be for the long term, as the market volatility could lead to losses in the short term. 

Avoid Trending Or Lesser Known Stocks: Many stocks may start trending during the time of Muhurat trading since interest in the stock market will skyrocket. Many lesser-known stocks may also see a sharp rise in prices and gain popularity. However, you should consider that these price rises are influenced by the festive season and Muhurat trading rather than the company’s performance. Hence, it is advisable to not purchase trending and lesser-known stocks unless you are an experienced stock trader. 

Consider Making A Ceremonial Investment Only: You may be tempted to make a large investment on the auspicious day of Diwali during the Muhurat trading hour. However, it is more prudent to make a small symbolic investment on this day given the volatility in stock price that occurs. You can choose to make a small investment as a Diwali investment and then make the bulk of your remaining investment when the stock market stabilises after the Muhurat trading, ensuring you will not be sustaining any major losses due to volatility.

Also Read: Diwali Muhurat Trading 2022: Top Stocks Analysts Are Betting On