Muhurat trading: investing for sentiments At 5.00 p.

m on Wednesday, when the whole nation will be celebrating the festival of lights with their families, with some flying off to distant lands on exotic vacations, there is one particular community that would still go to work. Welcome to the tiny but growing breed of stock market aficionados who will be headed towards their stock brokers' offices with their families in tow for their annual pilgrimage of Muhurat trading. What is muhurat trading? Mahurat trading is the auspicious stock market trading for an hour on Diwali (Deepawali), the biggest festival for Hindus. Muhurat trading in the stock market happens for about an hour on Diwali day. Usually, this trading session is held in the evening. It is a symbolic ritual which has been performed for years. The practice of muhurat trading has been retained and observed for ages. Usually, the Sensex closes on a higher note on the muhurat trading day. Most traders buy on this day. Investors place token orders and buy stocks for their children, which are held for the long term and sometimes never sold. Traders normally book their intra-day profits, however small they may be. For the trading communities of the north, the new financial year begins with Diwali. That is the reason puja is performed to accounts books and safes on Dhanteras as well as on Diwali day. A coin - which signifies wealth - is placed on the account books before the puja. How it is celebrated For a change, stock broker offices will take on a distinctly ethnic look with neatly made rangolis and innumerable diyas lined up to welcome the mother goddess Lakshmi, and of course the clients and their better halves. Jeans and khakis will give way to saris, silks, and long tresses with perfumes getting a bit louder. A heady aroma of roses and marigolds permeates the air as soon as you enter the gates of these modern-day casinos, carefully avoiding the diyas that line the aisle. A mouthful of kaju katlis and many handshakes later, when you finally enter the dealing room, the computer screen wears a swastik etched in vermillion with shubh and labh written on the multimedia speakers, never mind the cleaning the office boy will have to do on Sunday. The children are in awe of the recognition and respect their father commands, while the spouses do a quick yet discreet reconnaissance of which of the beautiful faces are guests and which are not. Performance of stock market during muhurat trading For the trader, it pays to buy a day before and sell on the Muhurat trading day.

A study of the last seven years show that on all the occasions the Sensex closed on a higher note on the Muhurat day. Most traders, in fact, buy on the Muhurat day. Volumes on the Muhurat day have been rising every year over the last few years. The Muhurat session of 2008 saw NSE register a turnover of Rs 1,557 crore. This vaulted to Rs 3,806 crore in 2009. Last year's Muhurat trade was a record with a turnover of Rs 4,200 crore and traded quantity of 2,390 lakh shares, with participation both by foreign investors and domestic institutions, though retail investors still traded the most volumes. Foreign institutional investors, believed to be absent in Muhurat sessions, actually did a turnover of around Rs 650 crore on the day. The Muhurat session of 2010 also saw the Sensex hit its all-time closing high of 21,004 points.

Does only buying happens? From the numbers reported by Bombay Stock Exchange, it is obvious that the sentimental' aspect to Muhurat trading, where investors earlier used to only punch in Buy trades, may be fading. There has been good amount of selling in the market in 2010 and 2009 sessions both from the retail and the institutional sides. While retail investors bought shares for Rs 1,476 crore last Muhurat session, they also put through sell orders worth Rs 1,452 crore. It is the price level that is important, I can't exit Reliance Infrastructure or, for that matter, State Bank of India, at the price of last Muhurat now, said a trader. The stocks are down 62 per cent and 44 per cent respectively from last Muhurat. Conclusion It can be seen that trade volumes during stock market has increased year by year. A positive Muhurat closing last Diwali didn't help the markets scale higher levels over the next one year. Though the 2010 Muhurat session saw the Sensex closing up by 0.5 per cent, the market has since headed steadily down and the index is now 19 per cent below its level last Diwali. While the sentimental appeal of Muhurat trading may be fading, investors, both retail and institutional, don't plan to sit on the sidelines in the Diwali session as they believe the day could see some important price action.