Whalesbook
The Indian stock market's customary Muhurat trading session, a symbolic one-hour trading window observed on Diwali to mark the commencement of the Hindu financial year (Vikram Samvat), will witness a significant timing shift in 2025. Traditionally held in the evening, the session will move to an afternoon slot.
A Mint analysis of the past 28 Samvat years (1997-2024) reveals that while the Sensex closed higher in 22 Muhurat sessions, reflecting Diwali optimism, the median return has been a modest -0.42%. Furthermore, market gains often dissipate quickly, with the session following Muhurat trading turning negative approximately two-thirds of the time.
Experts like Sachin Jasuja, head of equities at Centricity WealthTech, highlight that Muhurat trading is largely symbolic and does not define market fundamentals. True market drivers are corporate earnings, quality, and growth trajectories, not short-term retail or FII activity. He advises a long-term approach for investors, focusing on strategic entry during this session.
Samco Securities recommends favouring large-cap or blue-chip stocks with stable earnings and reasonable valuations, suggesting trades be held for weeks or months to benefit from compounding and positive sentiment. They caution against speculative trading during this auspicious period.
Dhananjay Sinha, CEO of Systematix Corporate Services, notes that while the Diwali event is a tradition, broader market factors like fundamental economic conditions, capital flows, and global policies diminish its independent relevance.
This year, precious metals have notably outperformed equities. Across 25 Samvat years, gold and silver have frequently outperformed during volatile periods. This Samvat, gold is up 52% and silver by 55% year-on-year, vastly exceeding the Sensex's 5% year-to-date gain. This outperformance is attributed to strong central bank buying, geopolitical tensions, economic uncertainty for gold, and global supply issues for silver. Manav Modi of Motilal Oswal Financial Services advises portfolio diversification into safe-haven assets like gold and silver, suggesting entry on dips due to current high prices.
Impact:
This news impacts investor sentiment by reinforcing the traditional auspiciousness of Muhurat trading while also tempering expectations with historical data showing limited significant short-term gains. The outperformance of gold and silver highlights a broader shift towards safe-haven assets amid global uncertainties, influencing asset allocation strategies for Indian investors. The timing change itself is a procedural update with less direct market impact than the sentiment and asset class performance trends. Rating: 7/10
Difficult Terms:
Muhurat Trading: A special, auspicious one-hour trading session conducted on the stock exchange on the day of Diwali, marking the ceremonial start of the Hindu financial year.
Vikram Samvat: The traditional Hindu lunisolar calendar, used for financial and cultural purposes in India.
Chopda Pujan: A religious ceremony performed by businesses on Diwali to worship account books and invoke blessings for prosperity.
Goddess Lakshmi: The Hindu goddess of wealth, fortune, and prosperity.
Sensex: A benchmark index representing the performance of the top 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE).
FIIs (Foreign Institutional Investors): Overseas entities that invest in Indian financial markets.
IPO (Initial Public Offering): The process by which a private company first sells shares to the public.
Bullion: Unminted precious metals, such as gold and silver, in the form of bars or ingots.
Dalal Street: A colloquial term referring to the Indian financial and business district, particularly the location of the Bombay Stock Exchange in Mumbai.
Samvat: A year in the Vikram Samvat calendar.
Year-on-year (YOY): A comparison of financial or economic data from one period to the same period in the previous year.
Outperformance: When an investment or asset class performs better than a benchmark or another asset class.