Investors are invited to buy and sell shares on Diwali.
Sajjad Bazaz
Ahead of Diwali, markets witnessed a boom as consumers were into shopping sprees to celebrate the auspicious occasion with fervor. Even as most of the consumers are done with the shopping, a special window of shopping opens in the stock market where people get money making opportunities through buying and selling of shares of different companies.
The special window is the one-hour Muhurat trading session held in the Indian stock markets on Diwali where investors are given the opportunity to make money by investing and trading. This session is mostly held in the evening and that is when most of the traders buy the stocks. Most of the traders trade during this time for religious, sentimental and traditional reasons.
Bombay Stock exchange (BSE) initiated the ritual of BSE Muhurat trading in 1957. The Diwali Muhurat trading in the National Stock Exchange (NSE) has been conducted since 1992. Muhurat trading time is ideal to buy and sell stocks due to the high trading volume.
It is considered a good time for both the experienced and the new investors and traders. However, it is advisable to be vigilant as a new trader. Experienced day traders can benefit from this session as most investors/traders are buying or selling shares to acknowledge the day’s auspiciousness.
Since the investors have fervent belief that Muhurat trading brings them a lot of profit as Sensex would have a bullish trend, many buy and sell the stocks on the same day. However, while doing so, one has to be cautious as there are Muhurat trading sessions where the Sensex has seen a loss. Also, there are times when the Sensex has dipped on the day after the festival.
The best option for any investor is to look out for good company stocks that are showing high returns or good cash flows to invest.
However, there are certain points which the inexperienced investors should follow on the Muhurat trading day. They will come across unsolicited emails and messages containing trade ideas to buy or sell shares. But they need to be careful about what they act upon. Trading with herd mentality and blind faith even on an auspicious day might lead to losses. Since the Muhurat trading window is open only for an hour, it makes sense to research the stocks well in advance before investing. Don’t forget to invest in stocks of different sectors to mitigate risk of losses as stock investing is loaded with high risk.
Even as there is no concept of Muhurat trading anywhere in the world, this time the timing of the special one-hour trading session is coinciding with the timing of the US market. Muhurat trading begins at 6.15 pm on October 24, while US stock exchanges open for trading at 7 pm (IST).
So, the Indian investors during the Muhurat trading session on Indian stock markets, can also trade on international brokerage platforms and buy US stocks and ETFs. Notably, shares of Apple, Amazon, Tesla, and many more are popular among Indian investors.
Market experts believe Muhurat Trading coinciding with the timing of the US market is an opportunity for the Indian investors to make money. Currently, US stocks are in a bear market and some quality companies are having lower valuations. Here lies the opportunity for the Indian investors to capitalize on the US bear market.
We have witnessed that millions of first-time investors have boarded the equity (share) markets in the last couple of years and most of them are young, in the age group of 18 to 35. It’s even interesting to see students showing an appetite to invest in a small way in a cross section of shares to reap benefits of the surging markets. These first-timers will be enthusiastic to explore the Muhurat trading opportunity to make quick money.
However, it’s important to understand, especially for the first-timers, that being an investor is entirely different from being a trader in the share market. You are a trader when you buy a stock because you feel like making profits out of the price movement of the stock. You sell and buy stocks without having real interest in the company behind the stock. As a trader your focus is entirely on the performance of the stock rather than the company behind the stock.
If you buy shares on the basis of performance of the company believing long term growth potential, then you are an investor. Here the goal of investing is to gradually build wealth over an extended period of time through the buying and holding of a portfolio of varied stocks for a period of years, taking advantage of bonuses like interest, dividends and stock-splits along the way. Notably, market dynamics suggest either be a trader or an investor. Don’t be both with the same stock.
In the context of trading, an investor can fall victim to share trading addiction. If an investor is unable to control stock trading, it’s simply an addiction. In order to clear yourself as not being a trading addict, you should ask yourself a few questions. Do you enjoy the challenge of trading even more than making money? Are you a big risk-taker? Are you willing to put large sums of money on a few stocks, depending on margins and on other credit lines for investing? Do you resort to bigger risks to erase your losses? Is it that the first thing you do when you get up and the last thing before you go to sleep is to check the position of your stocks? Do you bet large portions of your investment portfolio on a few stocks?
If your answer to these questions is affirmative, then treat yourself as a victim of online trading addiction. Precisely, it’s an illness.
I haven’t seen people talking about this kind of affliction, but the addicts suffering from uncontrollable online stock trading are no less serious than what ails the gambler who can’t stay away from gambling. While talking in the local context, I have seen online traders here who do nothing else but remain busy in trading stocks and their tendencies are of a compulsive gambler.
How can one get rid of addictive trading? First and foremost is to identify yourself as an online trading addict. Then the next step is harder, as you need to acknowledge that you need help for de-addiction. Don’t hesitate to seek help. However, it’s possible that once you identify yourself as a trading addict, you can help yourself in the de-addiction process through will power. Further, stepping away from the stock market for some period and divorcing the market specific news as much as possible will strengthen effective dealing with addictive trading.
Sajjad Bazaz heads Internal Communication Department of Jammu & Kashmir Bank Ltd. The views expressed are his own and not of the institution he works for.
