Muhurat sessions usually positive, but hardly leave any cue

Stock exchanges conduct muhurat trading on the first day of the Hindu calendar's new accounting year, called Vikram Samvat, in the evening of the Diwali day. Usually brokers and traders indulge in muhurat trading and very few investors venture into it.

Muhurat trading used to be a landmark event for the stock market every year. But more than being a trend-setter, it involves more symbolism and it doesn't leave any cue on the near-term of long-term direction of the market.

Going by history, the stock market has traditionally done well in muhurat trading, notching up gains on 16 of last 20 occasions. Even when this day fell in between a major market downturn, the benchmark indices ended with gains. Only in the years 1995 (-0.80 per cent),  1997 (-3.33 per cent),  2007 (-0.79 per cent) and 2012 (-0.28 per cent), did Sensex close with losses.

If you look at the performance during the Samvat year, Sensex tanked 11.64 per cent in the Samvat that followed 1995 Diwali, 25 per cent in the one that followed 1997 Diwali and 52 per cent in the one that followed 2007 Diwali.

Only on four occasions during these 20 years has the Sensex gained more than 1 per cent. The only major jump happened during the ‘muhurat’ trading session of 28 October 2008. Here the Sensex went up by as much as 6 per cent. The index, which closed at 8,510 on the day before the eventful day, went on to close at 9,008. During the ‘muhurat’ session of 2010 (on November 5, Sensex closed at its highest in history till then, at 21,004.96 points, though the indices had gained just half a percentage ).

But what is more striking is the following day’s trade after ‘muhurat’ day. The Sensex has closed on a negative note on 10 out of the last 15 trading sessions on the next day. The story has been similar over the last couple of years; the index shed what it had gained on ‘muhurat’ trade. However, when the index gained 6% in 2008, it closed positive on the next day’s trading session as well. And it has been the only occasion in the last five years when the markets had closed positive on the day after ‘muhurat’ trading. So will Muhurat trading this year end with a bang... to be followed by a whimper?

Stock exchanges conduct muhurat trading on the first day of the Hindu calendar's new accounting year, called Vikram Samvat, in the evening of the Diwali day. Usually brokers and traders indulge in muhurat trading and very few investors venture into it.

While most people only invest token amounts to symbolise auspicious start to the new Samvat, over the years, some investors and traders have started using this occasion for intra-day trading to make a quick buck.

Dhanteras marks the first day of the five-day Diwali Festival in northern and western India, when Goddess Lakshmi and Lord Kubera, the God of assets and wealth, are worshiped to provide prosperity and well being. Some do not carry forward their trades, while few others pick blue chips or potential value bets to hold for the long term. This is why brokerages usually come out with long lists of potential value bets to nibble at during the mururat trading.