Muhurat Trading: How to Make a Smart Trading Plan for Diwali 2025

The Indian stock market’s unique intersection of finance and culture is best embodied in Muhurat Trading, a special one-hour trading session held every year on the auspicious day of Diwali. For many, this ceremonial trade marks the beginning of the new Hindu financial year, Samvat 2082, and is steeped in the tradition of inviting prosperity and good fortune.

For 2025, the special session on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) is scheduled for Tuesday, October 21st. Breaking from recent years’ tradition, the main trading window will take place in the afternoon, generally from 1:45 PM to 2:45 PM IST, following a brief pre-open session. While the primary sentiment is symbolic, the trades executed are real, with full settlement obligations. Therefore, a clear, pre-planned strategy is essential to navigate this brief but often volatile window effectively.

Here is a guide on how to prepare a smart trading and investment plan for Muhurat Trading on Diwali 2025.

Understanding the Significance and Market Dynamics

Before forming a plan, it’s crucial to understand the nature of Muhurat Trading:

• Auspicious Beginning: The session is fundamentally a shubh muhurat (auspicious hour) for a new beginning. Many investors treat it as an opportunity to make a token purchase of a quality stock for their long-term portfolio, believing this first investment will bring financial success for the year ahead.
• Historical Positivity: Historically, the festive cheer often translates to a generally positive market mood, with the benchmark indices often closing higher. However, past performance is no guarantee of future results.
• Low Volume, High Volatility: The short, one-hour duration often leads to thin trading volumes. This low liquidity can, paradoxically, result in higher volatility, as a few large orders can cause sharp price fluctuations. This is a critical factor for short-term traders to consider.

Step-by-Step Guide to a Smart Trading Plan

A successful Muhurat Trading strategy hinges on meticulous preparation, given the extremely limited timeframe.

1. Define Your Goal: Investor vs. Trader

The first decision must be whether you are approaching the session as a long-term investor making an auspicious buy or an intraday trader looking to profit from the short-term volatility.

• For Investors: Focus on acquiring high-quality stocks to hold for the long term. The primary goal is a symbolic, well-researched entry into the new Samvat year.
• For Traders: Focus on short-term movements. You must have clear entry and exit points and be prepared for rapid execution and potential sharp reversals.

2. Pre-Session Research and Watchlist Preparation

Given the one-hour window, you cannot afford to research on the fly. All analysis must be completed beforehand.

• Focus on Blue-Chips/Large-Caps: For both investors and traders, large-cap stocks (blue-chips) are generally a safer bet due to their better liquidity. Avoid small-cap or penny stocks, as low volumes can make it difficult to execute trades or exit a position at the desired price.
• Identify Fundamentally Strong Stocks (for Investors): Create a list of 3-5 companies with strong fundamentals, healthy Return on Equity (ROE), consistent profitability, and reasonable valuations. Consider companies in resilient or non-cyclical sectors like FMCG or Utilities.
• Gold and Silver ETFs: As a traditional asset for Diwali, considering an investment in Gold or Silver Exchange Traded Funds (ETFs) is a smart way to diversify and symbolically participate in the auspicious purchase of precious metals.
• Technical Levels (for Traders): For intraday trading, use technical analysis (Moving Averages, RSI, Support/Resistance levels) to pre-define your entry, target, and crucial stop-loss levels.

3. Operational Readiness is Key

Technical issues during the 60-minute session can mean missed opportunities.

• Fund Your Account: Ensure your trading account is sufficiently funded well in advance. No last-minute fund transfers.
• Check Credentials: Log in the day before to confirm your trading platform access and credentials are working perfectly.
• Understand Order Types: Be ready to use appropriate order types. Limit orders are advisable to ensure your trade is executed at or near your target price, especially given the potential for price spikes.

4. Execution Strategies During the Session

The short duration demands discipline and quick action.

• Avoid the Opening Rush: The initial few minutes (the pre-open and the first 10-15 minutes of the normal session) can be highly volatile as the market digests the day’s festive mood. Investors can wait for the market to settle down slightly before placing their “auspicious” token order.
• Set Strict Stop-Losses (for Traders): Due to the high potential for volatility, intraday traders must use strict stop-loss orders to limit potential losses in case of a sharp, unexpected price move.
• Focus on the Long Term (for Investors): The symbolic investment should be made with a minimum 5-year outlook. Do not panic and sell if the stock dips shortly after your purchase. The purpose is not instant profit.
• Prioritise Execution over Price Perfection: Given the time constraint, a small variance in the execution price is often better than missing the trade entirely.

5. Risk Management and Discipline

• Budget Your Capital: Muhurat Trading is a ritual, not a primary investment strategy. Allocate only a small, pre-determined portion of your annual investment budget to this session. Never trade with borrowed funds or excessive margin.
• Avoid Herd Mentality: Do not make impulsive decisions based on last-minute tips, social media hype, or the overall festive buzz. Stick rigorously to your pre-planned watchlist and strategy.
• Review Post-Trade: Once the session closes, log your trade and review it. This helps reinforce discipline and provides a learning experience for future sessions, regardless of the outcome.

Muhurat Trading 2025 offers a chance to participate in a time-honoured tradition while making a strategic, positive start to the new Samvat year. By combining the cultural significance of Diwali with rigorous financial planning, investors and traders can ensure their auspicious start is also a smart one.