Samvat 2081: Muhurat trading amid high hopes and caution for markets

As India celebrates Diwali, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are preparing for the highly anticipated muhurat trading session this evening.

Scheduled from 6 pm to 7 pm, this one-hour trading window marks the beginning of Samvat 2081, the new year according to the Hindu Vikram Samvat calendar, a period traditionally seen as a time of fortune and prosperity for investors.

Held during the auspicious Laxmi Puja, muhurat trading has become a cherished tradition on the BSE since 1957, later adopted by the NSE in 1992. This event allows investors, traders, and institutions to engage in symbolic trade, reflecting optimism for the upcoming year.

While trading volumes remain lower than regular hours, the positive sentiment and cultural significance attached to muhurat trading make it one of the most celebrated events in India’s financial calendar.

Entering Samvat 2081, the Indian equity market finds itself at a critical juncture. Over the past year, domestic participation has strengthened market stability, even as global uncertainties weigh on economies worldwide.

Retail investors, largely through equity mutual fund schemes, have played a crucial role, consistently injecting over Rs 20,000 crore monthly, or roughly USD 3 billion, into the markets.

This strong inflow of local funds has bolstered the market against external pressures, despite factors such as high valuations and persistent Foreign Institutional Investor (FII) outflows. Over the last Diwali-to-Diwali period, the Nifty index surged over 26 per cent, marking an extraordinary year for Indian markets driven by domestic support.

However, with elevated valuations and earnings volatility, the coming year may test the resilience of retail investors as global factors and geopolitical challenges persist.

The past year has witnessed notable gains across several equity indices. Leading the way, the Nifty Power index achieved an impressive 79.86 per cent return, reflecting a surge in energy demand. The Nifty PSE and Nifty CPSE indices followed with gains of 72.03 per cent and 69.27 per cent, respectively, underscoring investor confidence in public sector enterprises.

Meanwhile, the real estate sector also saw substantial growth, with the Nifty Realty index posting a 68.34 per cent return. Such gains are promising, yet the market's elevated valuation levels highlight a potential challenge, as Angel One Ltd senior vice-president of research Aamar Deo Singh notes that investors will need to navigate volatility.

Historically, muhurat trading sessions have been met with positive outcomes, with indices closing in green 13 times out of the last 16 years. Last year, indices gained over half a percent, marking one of the best performances in recent memory.

At the same time, the most notable session occurred during the 2008 financial crisis when indices surged nearly 6 per cent. According to Singh, Samvat 2081 appears promising overall, though he advises caution as volatility will likely persist due to current economic conditions and geopolitical tensions.

Today’s muhurat trading session includes multiple phases, such as the pre-open market, normal market, and closing sessions, with the one-hour normal market session as the focal point.

As global markets continue to experience economic fluctuations, the Indian trading community hopes that this evening’s trading will bring positive outcomes and prosperity, setting a constructive tone for the new fiscal year ahead in Samvat 2081.