Some say the tradition, which comes from the Gujarati community that once dominated trade.
NEW DELHI: India’s stock market may have come of age with the introduction of complex derivative products and thanks to the technological advancements in the form of algo trade, high-frequency trade and online trading.
But some customs have stayed on, Muhurat trading being the most significant one. Diwali, the festival of lights, marks the beginning of the traditional Hindu accounting year, called Samvat.
Next week’s Diwali on October 27 marks the advent of Samvat 2076. Stock bourses have announced the customary one-hour special ‘Muhurat’ trading between 6.15 pm and 7.15 pm, a time beyond normal trading hours but fixed as per the astrologically defined auspicious moments of the day.
Stock trading on this day is an old symbolic ritual that the trading community has followed for more than half a century now. They consider it good omen to do some bit of stock trading on this day to propitiate Goddess Lakshmi, the Indian goddess of wealth and prosperity, for her blessings throughout the Samvat year.
The story goes that on the night of Lakshmi Pooja, the goddess comes to reside at the place where She is propitiated. “That’s the reason traders and shopkeepers stay awake with lights burning all night to welcome Goddess Lakshmi any time she chooses to come,” said a spokesperson for BSE.
BSE, Asia’s oldest bourse, has an over 60 years history of conducting Muhurat trading.
“Muhurat trading is symbolic of the traditional New Year’s Day, when people would participate in trading for the sentiment as well as for portfolio building,” says Deven Choksey, a Dalal Street veteran and Group Managing Director at KR Choksey Investment Managers, who has participated in Muhurat trading for decades now.
“In earlier days, people used to physically go on the floor and trade. Now, they do it online,” he said.
The iconic BSE building is decorated and illuminated for this occasion, as stock traders flock to its premises in traditional attire along with their family members to conduct Diwali poojan (worshipping) before taking part in trading.
Some say the tradition, which comes from the Gujarati community that once dominated India’s trade and commerce, grew roots in the stock market because of their overwhelming presence in this sphere.
Stockbrokers perform ‘Chopda Pooja,’ a Gujarati tradition of worshipping account books, on the stock exchanges before Muhurat Trading.
“The trading community performs pooja on account books, safes and tijoris on Dhanteras as well as on Diwali. A coin is placed on the account books before the pooja, which is supposed to signify wealth, and it is preserved and again used in the pooja next Diwali,” the BSE spokesperson said.
One belief is that stocks bought on this day are for keeps, so that they can be passed on to the next generation.
“With the onset of digital trading, the sentimental value has waned. Participation is confined mostly to trading now and people do not undertake significant portfolio building exercise. But the tradition of Lakshmi poojan, and pooja of the books continues,” says Choksey.
Dharmesh Kant of IndiaNivesh Securities talks fondly of this tradition. “People wear traditional clothes and bring families to broking houses for Lakshmi poojan. For those who are into stock trading, a gain on a token trade, whether it’s a buy or sell trade, is believed to set the tone for the rest of the year,” he says.
Trades executed during the Muhurat trading session carry settlement obligations. Stock exchanges remain closed the next day, October 28 this year, for Diwali Balipratipada.
The equity indices have historically ended with gains in these special trading sessions, though trading volume is usually very low and fewer stocks move during that short duration.
BSE Sensex has settled higher in 11 out of last 14 Muhurat trading sessions. Last year, it climbed 0.7 per cent to settle at 35,237, while Nifty rose 0.65 per cent to 10,598.
On October 28, 2008, the Diwali day, the Sensex surprised many by climbing 5.86 per cent in the one-hour session. It settled at 9,008 for the day, but remained rangebound for the rest of the year as the global financial crisis unfolded.
Analysts are largely positive about Samvat 2076. In a survey conducted by ETMarkets.com, some brokers projected Nifty to hit the 13,000 mark by next Diwali. Details of the survey will be released shortly.
Nifty traded at 11,450 on Thursday, up 9 per cent for the Samvat year which ends on October 27, 2019.
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