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Diwali, the festival of lights, is a time of celebration and optimism, and for investors, it also marks a significant occasion—Muhurat Trading. This special one-hour trading session on the auspicious day of Diwali is considered a favorable time to begin a new investment journey, seeking blessings from Goddess Lakshmi, the deity of wealth. The Hindu New Year, Vikram Samvat 2081, presents a perfect opportunity for investors to re-evaluate their portfolios and plan their future stock market investments. However, navigating the stock market effectively requires a well-defined strategy, especially during a time of both challenges and opportunities.
To provide investors with valuable insights, we reached out to five market experts to gather their perspectives on the market trends, key sectors to watch, and how to craft a successful Muhurat Day trading strategy. Ajit Mishra, SVP, Research at Religare Broking, highlighted the corrective phase the market has been experiencing for the past four weeks, with signs of recovery yet to emerge. He suggests aligning trading strategies with the current market trend, noting that a close above 24,500 on the Nifty index could signal further recovery, while a break below 24,000 might lead to a test of the 200-day exponential moving average (DEMA). Mishra recommends investors consider accumulating quality stocks on dips, adopting a medium- to long-term perspective.
Puneet Sharma, CEO and Fund Manager at Whitespace Alpha, emphasizes that Muhurat Trading is not just a trading session but a ritual of optimism. He suggests taking advantage of the low volumes and reduced volatility characteristic of this session for tactical positioning rather than frenzied trading. Sharma advocates for a 'butterfly options strategy' as a suitable approach for this session. This strategy involves a calculated combination of call options with different strike prices, allowing for potential profit if the market remains stable, which is typically the case during Muhurat Trading. The butterfly strategy is particularly attractive due to its low volatility, limited risk, defined reward, and the advantage of time decay working in the investor's favor.
Trivesh D, COO of Tradejini, takes a more traditional view of Muhurat Trading, suggesting it is less about profit maximization and more about symbolic participation. He believes investors tend to use this session for small purchases in stocks they have been observing, rather than engaging in active trading or making substantial investments. For many, it is a time-honored practice to buy a few shares to mark the occasion, focusing on sentiment and the symbolic significance of the day.
Amit Golia, Group CEO of MarketsMojo, recommends investors consider sectors that promise enduring relevance over the next two decades. These include technology, healthcare, renewable energy, and infrastructure, sectors likely to drive significant value in a fast-evolving economy. For those interested in shorter to medium-term gains, consumer goods and consumer durables are seen as potential strong performers, given increased consumer spending and the possibility of higher quarterly earnings during the post-festive season. This approach allows investors to capitalize on immediate trends while positioning for sustained growth in the long term.
Atul Parakh, CEO of Bigul, acknowledges the potential for increased volatility during Muhurat Trading due to the restricted trading timeframe. While emphasizing that making money should not be the primary goal, he encourages both experienced and new investors to participate in the market during this special occasion. Parakh advises investors to adopt a long-range view when engaging in this session.
Source: Diwali 2024 Muhurat trading: What should your strategy be for Nifty 50? A guide from 5 experts