Muhurat Trading 2023: What Should Be Your Trading Strategy This Diwali?

Samvat 2080 marks the beginning of a new Hindu year or Vikram Samvat. It is considered auspicious for stock market investors and marks a fresh start for them.

Muhurat trading is a one-hour special trading session conducted on the day of Diwali and is considered auspicious for trading in the Indian financial markets. During this session, traders and investors participate in the stock market trading for a short period to seek blessings for prosperity in the coming year.

Most Hindu investors take blessings of Goddess Laxmi by worshiping their books of account on eve of Diwali and start new account books for the next business cycle.

Historical Performance: Muhurat Trading Days Make Diwali Happier For Bulls

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.

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.

How Did The Stock Market Perform In Samvat 2079?

Jigar S Patel, Senior Manager – Technical Research Analyst, Anand Rathi Shares and Stock Brokers, said: “The year went by with resilience and all-time highs for key benchmark indices, despite global turbulence like high interest rates, rising bond yields, crude oil prices, and the Middle East crisis.”

“Nifty has been in a solid uptrend on the monthly charts. The index took out a 19-month consolidation, which pushed it towards 20222, which was its all-time high. Though Nifty saw some correction but not a major one during the year, before continuing its major uptrend, we may see a small correction until 18500 in the coming time,” Patel added.

Apart from Nifty IT, other sectors like auto, FMCG, pharma, and metals are hovering near the top, which may call for booking profit in the coming months, he said.

Muhurat Trading Strategy

The Indian economy currently finds itself in a sweet spot of growth and is well-poised for continued resilience in the face of global challenges. Samvat 2080 will be quite a fascinating year to watch out for the global economy, analysts said.

Pranav Haridasan, MD & CEO, Axis Securities, said: “We embark on this new Samvat with a narrative marked by ‘Higher for Longer’ interest rates, volatile bond yields, geopolitical conflicts in the Middle East, and fluctuating oil prices. However, on the domestic front, the prospects for the Indian economy appear notably brighter and more promising. Amid a volatile global landscape, India remains in a favourable position for growth, which will be a significant driving force behind Indian equities in the foreseeable future. The improvement in the balance sheet strength of corporate India and the much-improved health of the Indian banking system are other positive attributes. They will ensure that Indian equities readily deliver double-digit returns in the next 2-3 years with the support of double-digit earnings growth.”

According to Harjeet Singh Arora, Managing Director at Mastertrust, meticulous planning is imperative, particularly within the short time frame of Muhurat trading.

“We have to clearly outline our financial goals whether we are looking for short-term gains or long-term investments. Usually, we witness volatile trading sessions hence thorough research is very important before deploying any trade,” Arora said.

He advises investors to look for companies with strong fundamentals, positive earnings reports, and growth potential. Additionally, they can also trade on stocks based on technical studies for short-term trading opportunities.

Arora emphasizes the importance of risk management while investing.

“Risk appetite varies from individual to individual, for long-term investment, portfolio risk could be mitigated by proper diversification. Investors are not recommended to concentrate all investments in one stock or sector,” Arora said.

For intraday traders, liquidity is a big factor given the short duration of muhurat trading. Hence, he recommends intraday traders to choose stocks with sufficient liquidity to ensure smooth execution of trades.

Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher Pvt. Ltd, said: “Nifty index as of now has moved past the crucial barrier of 19200-19250 zone with decent pullback witnessed from 19000 zone and upside we have the next major hurdle near 19500-19550 zone which needs to be breached decisively to establish conviction and confirm for furhter upward move. For Muhurrat Day trading one can go for select quality stocks of the likes of CDSL, BHEL, ZYDUS LIFE, EXIDE, TATA MOTORS for the short term time frame investment. Along with active participation already seen among the broader markets, if Nifty index once gives a confirmation above 19550 zone shall furhter strengthen the trend anticipating for strong upward movement of the index.”

Commodity trading

In the commodities market, buying precious metals such as gold and silver is considered auspicious during Diwali Muhurat trading.

Commodity market experts believe investors should look for long term gains rather than betting on short term gains in the commodities market.

“Trading in commodities should be done for the long term. Gold, silver and other metals have given strong returns since last Diwalo. Investors tend to make more money by investing in commodities for the long term,” said Ajay Kedia, Director, Kedia Advisory.

Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart Ltd., said: “Inflation has risen rapidly in the global economy, and gold is the best asset class to hedge against inflation. However, the US Fed and other major central banks have started increasing their interest rates to control rising inflation, but the higher borrowing costs are damaging global growth. Currently, interest rates in the US are at 5.5%, which is quite high, and further increases in interest rates may cause economic turmoil. Although an interest rate cut is expected in mid-2024, it may support gold prices. The ongoing geopolitical tension and fear of recession have elevated the demand for safe havens, and this may continue into 2024. We are expecting the gold prices to move towards $2250 in the Comex division, while in MCX, prices may move towards 64,000 to 66000 per ten grams in the year 2024. The gold prices have crucial support at 56000. Silver prices also move upward and may test 78000 to 80000 per kg levels in the upcoming year.”

Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.