India: Trading Hours And Muhurat Trading On Deepavali In India

The stock market in India is regulated by the Securities and Exchange Board of India ("SEBI"). The business hours for dealing in the securities in different segments (such as equity, F&O, commodities derivatives, etc.) on the Exchanges (BSE, NSE, MSEI, etc.) is decided by the stock exchanges from time to time in consultation with SEBI.

Securities Law enthusiasts may analyze Section 9 of Securities Contracts (Regulation) Act, 1956 wherein stock exchanges are empowered to provide for the opening and closing of markets and the regulation of the hours of the trade. The bye-laws of a stock exchange requires prior approval of SEBI. Even though the stock exchanges have the power to determine the trading hours, since there are many stock exchanges such trading hours are finalized under SEBI approval for uniformity and market efficiency.

Currently, the usual trading time for the equity market is between 09:15 am to 03:30 pm, Monday to Friday. The trading time for the commodity (non-agriculture) market (like gold, silver, crude, etc.) on MCX and NCDEX exchanges is between 10:00 am to 11:30 pm.

Historically, on the festival of Deepavali there is a special trading session that is organized by the stock exchanges. This is also popularly known as Muhurat Trading. This year it will be held on November 04, 2021 for a period of one hour.

Muhurat trading is considered as a special auspicious hour for stock market trading. Diwali is a festival celebrated in India which also marks a New Year (Panchangam) in accordance with Vikram Samvat, 2078 and followed by many of the trading and business community in the securities market. Many traders undertake Lakshmi Pujan (worshiping goddess Lakshmi – the goddess of wealth) and Chopda Pujan (worshiping the books of accounts). The traders believe that trading during this special hour on the auspicious day of Diwali brings wealth, prosperity and yield good returns throughout the year.

Muhurat trading has been observed as a ritual which has been followed since ages by the trading community. This special trading session has a long history and has been followed since over five decades. First of such trading sessions was conducted by the BSE Limited in the year 1957. The National Stock Exchange started this felicitous tradition in 1992.

Historical Data

It is pertinent to see how the market reacts during these auspicious trading sessions. Historical data as on 2020 shows that out of past 15 Muhurat Trading sessions, the market remained bullish on eleven such occasions.

Lets examine the trend for last five years:

As one can see, four out of last five years has brought the indices to the positive impact.

Timings of Muhurat Trading Sessions

The timings of trading session on November 04, 2021 on account of Muhurat trading on Diwali will be as per the following schedule.

(Note: kindly refer NSE Circular Ref. No: 109/2021 dated October 21, 2021; NSE Circular Ref. No: 85/2021 dated October 21, 2021; BSE Notice No. 20211021-32 dated October 21, 2021)

Interestingly, some of the registered stock-brokers have been offering zero brokerage charges on all intraday, F&O and commodity trades to encourage traders to trade during the Muhurat Trading session. More interestingly, India has not seen an enforcement action from SEBI for any insider trading, synchronized trade, fraudulent trade or manipulative practices undertaken in Muhurat Trading, if any.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.