Moneycontrol
Last Updated : Nov 07, 2018 10:56 AM IST | Source: Moneycontrol.com

Invest small, but in large-caps this Muhurat Trading day and avoid mid-caps

There are talks about the bearish phase. Yet, there are more and many reasons to be optimistic about the markets. Buying at these levels and locking-in for the long-term can reverse fortunes.

Moneycontrol Contributor @moneycontrolcom

Rahul Jain

Another year has gone by and we have witnessed mixed fortunes. From amazing rallies that started last year, to multiple rounds of correction and consolidation, the market has seen more than its fair share of ups and downs.

There are talks about the bearish phase. Yet, there are more and many reasons to be optimistic about the markets. Buying at these levels and locking-in for the long-term can reverse fortunes.

Interestingly, our rituals, our practices, our ceremonies, and our conventions are all about looking up, being positive, and ushering growth. And Muhurat Trading is just the beginning, literally.

Over the years, the Indian stock market has essayed sentiments of excitement, hope, and positivity during this time of the year.

Muhurat is an auspicious time slot on the day of ‘Lakshmi Pujan’. Investing, or any business activity, initiated during this time is believed to bring good luck, wealth, and prosperity.

Although stock markets remain closed on this day of Diwali, the national stock exchanges, both BSE & NSE, open for Muhurat Trading for an hour.

Muhurat Trading also sees new investors, looking to enter the capital markets, with token investments. At the same time, existing investors, small and institutional ones, carry out some trades as a token of auspicious buying.

Starting on a Positive Note:

In the last ten years data (2008-2017), it has been observed that the Sensex mostly rises on the Muhurat day and falls in the next session. In fact, the BSE Sensex has closed in green in 7 out of the last 10 years. Samvat 2074, began on a somber note, with a 0.6 percent drop.

While the sentiments are at a high, there are a few things one should follow to make the most of the Muhurat Trading session. It has been observed that investors prefer buying small and mid-cap shares during Muhurat.

This could also be the right time to engage a financial advisor to make an educated and informed choice to invest in companies that are fundamentally strong and have shown consistent performance.

Muhurat Trading opens for an hour-or-so which limits liquidity as well as the time for trading; hence intra-day trades might not be wise.

New investors looking to get started can make token investments to mark the auspicious occasion. While doing so, don’t get swayed by the festive sentiments. Invest a small amount, ideally in large-cap scrip.

The Road Ahead:

Indian economy is on road to consolidation. The developments in the last five years have been the groundwork, and one can expect robust and sustainable growth once these systemic changes are in place.

Albeit the short-term volatility due to global developments, depreciating rupee, and the upcoming state elections and the Lok Sabha elections in 2019, the long-term growth story remains intact.

Its impact will be seen in the stock market over the next two years, creating an ideal opportunity to invest. If you are a new investor looking to invest in stocks or a seasoned trader looking to expand your portfolio, ‘Muhurat Trading’ is a good time to get started.

Invest for the long-term, because trying to time the market can see your money go up in a smoke, just like Diwali crackers!

The author is Head, Personal Wealth Advisory, Edelweiss.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Nov 7, 2018 10:56 am
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