While there are basic distinctions between different kinds of trading, one way of trading is way more offbeat than the others.
Diwali, which is known as the festival of light, is awaited and adored by everyone in India every year. According to the Hindu calendar, it is an auspicious time as it symbolizes the victory of light over darkness, knowledge over ignorance, and good over evil. Just like any other religious festival, there are many beliefs. One of those traditions is Muhurat Trading. It is a deeply rooted tradition in the Indian stock market.
Traders and investors nationwide participate with utmost enthusiasm as it is believed to bring wealth and prosperity in the coming year. In other words, the stock market Muhurat Trading is a mix of faith and finance. In this blog, we will take a look at the details of Muhurat trading.
Before we get into the details of Muhurat trading, let us take a moment to understand the term 'Muhurat'. The term Muhurat basically means an auspicious time. According to Hindu customs, Muhurat is the auspicious time when the planets are aligned favourably to make sure of positive results.
Muhurat trading is a very common ritual that traders follow in India. It is a one-hour time that is thought of as auspicious on the day of Diwali for investing in shares. The stock exchange basically signifies the time of Muhurat trading each year.
If we are to have the conversation of popular beliefs, individuals trading during this hour have a better chance of gaining prosperity and earning wealth on their Muhurat trading account online throughout the year. Generally, this period is during the Diwali evening, and the majority of people prefer purchasing the stocks as a token of Goddess Lakshmi. It is a very unique tradition in the Indian stock market.
The rich history of Muhurat Trading is entwined deeply within India's financial and cultural fabric. The practice is thought to have been in place for many decades now, coinciding with the formalization and growth of the infrastructure of the Indian stock market. The special trading session on the festival of lights embodies the philosophy of India that associates new beginnings with auspicious timings, alternatively known as muhurats.
The Bombay Stock Exchange was one of the first to institutionalize this kind of trend. After a few years, NSE also adopted this kind of practice. The session is generally small as it ranges between 60 to 90 minutes. However, the significance of this goes really far beyond the short duration.
It also reflects India's unique blend of modernity and tradition. As the stock market operates on data-driven principles, this session provides spiritual and cultural beliefs deeply rooted in Indian history. The practice has not only stayed with the Indians but has also evolved over the last few years. These days, the Muhurat trading session is marked with high trading volumes, with a lot of traders holding onto their Muhurat purchases on the online trading account as a long-term investment.
This special way of trading is divided into different parts. Here are some of the key components of stock market Muhurat trading:
The two parties agree to purchase or sell a security at a fixed price in this part of the session. They also inform the stock exchange regarding such transactions. The segment enables the execution of large transactions of predetermined prices.
This session is a vital phase that happens before the official muhurat trading time begins. During this phase, the stock exchange gives the equilibrium price, which is the stocks' opening price. This procedure generally takes around eight minutes.
The main part of Muhurat Trading is this one-hour normal market session. It is where the majority of trading activities take place. During this time, investors and traders may purchase or sell the securities. It is a chance to close or initiate positions on a positive note.
The call auction session is developed for trading illiquid securities. An illiquid security is something that does not constantly change hands in the marketplace and does not have a trading volume that is consistent. To have better clarity on which securities are eligible for the session, the exchange sets certain criteria.
The closing session is the last part of muhurat trading. At the time of this phase, the investors and traders may place market orders on the trading account at the closing price of securities. It enables the participants to wrap up their trades at the conclusion of their trading session.
Deciding whether Muhurat trading is for you or not is confusing for new and seasoned traders. If you are someone who values tradition and can deal with high trading volumes with increased liquidity, you may certainly give it a go.
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