Why they play the Muhurat session

| Updated on January 22, 2018 Published on November 08, 2015

As the nation celebrates Diwali, some investors stay glued to their trading terminals, keying in their Muhurat trades. Meera Siva checks out what they buy and why it is important to them

Token purchase of gold

In many parts of the country, Diwali is associated with the worship of Lakshmi, the goddess of wealth. Since stock markets can create wealth for you, putting in a token trade is considered part of the worship by many. Venu Madhav, who works as chief of operations at a technology firm in Bengaluru, says that trading in the Muhurat session is a Diwali ritual that his family has been following for many generations.

“Muhurat trading for us marks the beginning of a New Year, referred to as Samvat,” says Madhav. “It has special significance in our family and we celebrate it by performing a Lakshmi puja conducted in my grandfather’s restaurant. This is a custom that we have been following for over 45 years,” he says.

He also makes a token purchase of gold as it is considered auspicious to buy gold. “I have been buying one unit of gold ETF for many years now,” he says.

He feels that buying the financial instrument is much easier compared to taking the trouble of buying and storing physical gold. And while he is okay with buying one unit to keep up with tradition, he does not think it prudent to make big investments.

“In my opinion, you must make an investment choice only if it is backed by proper research. Merely buying blindly, without analysis, on this day will not make one’s investment profitable,” he cautions.

Madhav is also a seasoned trader and does not advise taking large positions on this day. “Trading in F&O on this day is a strict no-no as volumes tend to be thin,” he notes. However, he suggests that it may be a good time for new market entrants to begin their investment portfolios.

“Invest in something small and start off on an auspicious note,” he suggests. Madhav notes that some brokers may also waive or reduce brokerage on trades on Muhurat trading day, a further incentive to start on this day.

Play it right, rake in profits

Muhurat day is extra special for traders and brokers such as Hitanshu Choudhary. His family has been in the brokerage trade for many generations and he recalls the celebration at the brokerage office during his grandfather’s time. “There would be elaborate rituals performed and a lot of sweets distributed to all the employees at the brokerage. Everyone would then sit down at their desks, pray for a good year and start to trade,” he recalls from his childhood years.

This year, Choudhary is starting his own brokerage house, Delhi Crescore Financials, and looks forward to the Muhurat day. As a market veteran, he says he rakes in good profits by trading on this day.

“The market is volatile and volumes are very thin. So spreads are wider than normal and if you know which scrips to trade on, you can make handsome profit,” he says.

“The best choices to trade on vary every year depending on the market mood and fundamentals. But, in general, commodities and commodity stocks have been seeing wide spreads and can hopefully be traded for profit this year,” he notes.

What about his clients? Do they trade for profits or do most of them just make a token purchase on this day?

“For some clients it is making notional profit that is important; they believe the whole year will turn out to be profitable if they start on a positive note on this day. But many of our clients are traders and they do not worry so much about making profits on this day. They want to be in the market on this day and rotate money whether or not they make a profit,” Choudhary explains.

Bet on large-caps

Besides traders, some long-term investors too like to dabble in the Muhurat session. Amir Abid Merchant, a tax professional and investor from Mumbai, says that he adopts a long-term strategy in investing and buys stocks that are fundamentally sound. “I have bought SBI, and HDFC Bank in the past and these have worked out well,” he details.

He has been a stock buyer on Muhurat day for the last five years. But he only buys a token quantity and spreads out the purchase over a period. Merchant is not attached to any particular stock and says his choice of stock each year depends on the market condition, performance and prospects of specific sectors. “This year I plan to buy Britannia, and HDFC Bank, as recommended by my brokerage,” he says.

Making an auspicious start

Not just long-time traders, many new investors such as Ashwini Herur of Bengaluru are also taking to this tradition. Ashwini, a B-school graduate who is currently a homemaker, has been learning the ropes of investing. “Deepavali is a very special festival and for over 20 years now, all our family members get together at my grandmother’s house to celebrate it. We perform Lakshmi puja, burst crackers, and have a festive dinner,” she says.

Now, after learning the basics about stocks for the past four years, Ashwini wants to do what seasoned investors do. “I was not aware of Muhurat Trading on Deepavali. But this year I want to buy stocks on this auspicious day,” she says.

But rather than trade or invest heavily, she wants to use the occasion as a good start for her long-term goal of building a stock portfolio. “I plan to invest a token amount in bluechip stocks, such as HDFC, Infosys and Sun Pharma,” she details. She wants to follow it up by adding to the portfolio on a systematic basis to build wealth through well-researched stock investments over a period.

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