Diwali Muhurat Trading Tips: Important things to keep in mind during 1-hour crucial time for earning profits - Expert opinion

Diwali Muhurat Trading Guide: This festive season is coming amid volatility in the financial markets due to US Federal Reserve tapering, liquidity outflows, FII/FPI selling of emerging markets equities. Apart from that, markets are battling with heightened input-based inflation further escalated by supply-side disruptions and persistent Covid-19 cases around the world. Amid all this, Aprajita Saxena, Research Analyst at Trustline Securities, shares her knowledge on Diwali Muhurat Trading Tips and Dos & Don'ts to be kept in mind for Muhurat trading day (between 6:15 pm and 7:15 pm on November 4):-

Dos for Muhurat Trading

Aprajita Saxena says, "Only small purchases – token. As a symbolic purchase on this festive eve, investors should make a token purchase of an initial investment that could deliver a long-term return on their investment. So, this is also the right time to enter markets for new investors.

"Invest in Quality stocks," she adds, saying, "Another important thing to do for Muhurat trading is to buy reliable and quality stocks at some reasonable valuations."

Aprajita Saxena further suggests, "Avoid Overtrading. This is a general mentality among investors or traders to earn some profit on this auspicious day that would be a harbinger of earning substantial profits going ahead. But for some practical purpose, this approach of amassing profits should be avoided."

"Limit or avoid intraday trading. Seasoned traders indulge in intraday trading on this day. However, this is a cup of tea for novice investors.  Most average investors are advised to avoid intraday muhurat trading due to the extremely short trading window and volatility in the market," she advised.

Don’ts for Muhurat Trading

Talking about dont's for Muhurat Trading, Aprajita Saxena said, "Don’t place large orders. Since this is not a normal trading session but a short trading session (lasting for 1 hour) and there is always a liquidity constraint. Hence, it is advisable to avoid placing any large orders."

"Don’t lose focus," she adds. "With festivity all around, there will be excitement on this occasion. Even though this is a festive day that does not mean assured returns. Therefore, investors will have to focus on the investment philosophy of buying companies with good business models, honest management teams and solid track records well at a reasonable valuation for the long-term investment period.""

She further opines, "Avoid falling prey to Rumors. Rumours and speculations, unverified tips will still be in circulation this time. So, it is better to avoid falling prey to this catchy and unreliable news and enjoy this day with family and friends." 

"Muhurat trading is a favourable time for new investors to enter the equity market. So, this festive season should be used to initiate one’s journey in the stock market for a prosperous investing/trading journey," she concluded.