Diwali 2024 Muhurat trading: What should your strategy be for Nifty 50? A guide from 5 experts

Diwali 2024 Muhurat trading: The Indian stock market is navigating through intriguing times. On one side, it’s facing headwinds from escalating geopolitical tensions and declining corporate earnings. But on the brighter side, tailwinds are blowing in with the onset of interest rate cuts and the promise of robust economic growth. The market, caught between these opposing forces, offers both challenges and opportunities for savvy investors.

Muhurat Day is considered an auspicious time for investments, blessed by Goddess Lakshmi, the deity of wealth. For those investing with a long-term perspective, this day is ideal for beginning a journey towards sustainable wealth creation.

The beginning of the Hindu new year, Vikram Samvat 2081, presents a perfect opportunity to reevaluate portfolios and plan stock market investments. However, to make the most of it, we need a solid strategy and a clear understanding of what lies ahead in the market.

We reached out to five market experts to gather insights on the road ahead, the key sectors and stocks to watch, and how to shape our Muhurat Day trading strategy. Here's what they said:

Ajit Mishra, SVP, Research, Religare Broking

The markets have been in a corrective phase for the past four weeks, and signs of recovery or reversal are yet to appear.

With the special one-hour Muhurat trading session scheduled for Friday on the auspicious occasion of Diwali, traders should align their strategies with the current market trend.

On the index front, a decisive close above 24,500 on Nifty could signal further recovery towards the 24,750-24,850 range, while a break below 24,000 could lead to a test of the long-term support at the 200-day exponential moving average (DEMA).

For investors, this is a favourable time to consider accumulating quality stocks on dips with a medium- to long-term perspective.

Our special report for Diwali recommends looking at SBI, ITC, Berger Paints, Titan, and Jyothy Labs for potential investments.

Puneet Sharma, CEO and Fund Manager at Whitespace Alpha

Muhurat Trading is more than just a trading session—it's a ritual of optimism. The one-hour session, steeped in tradition, typically attracts low volumes and less volatility, making it a great opportunity for tactical positioning rather than frenzied trading.

So, while the markets may be playing it cool, the savvy investor can still have some fun with strategic moves like the butterfly option strategy.

While markets are in a corrective phase, it’s the perfect time to play it smart, not aggressive.

Enter the Butterfly strategy. The butterfly options strategy is an ideal fit for this session. Think of it as a calculated dance where you limit your risk but still position yourself for some upside. Here’s the structure:

* Buy one call option with a lower strike.

* Sell two call options at the middle strike.

* Buy one call option with a higher strike.

This setup lets you profit if the market stays stable, which is highly likely during Muhurat Trading. It’s like flying under the radar, staying within a well-defined range while minimizing your downside risk.

This strategy is important because of:

1. Low volatility, high precision: Muhurat Trading is not the time for big moves, and that’s where the butterfly spread excels. You’re betting on the market staying within a range, which is typically the case during this session. It’s like planning a party where you already know most guests won’t make a scene.

2. Limited risk, defined reward: The beauty of this strategy is that your risk is capped. You know exactly what you’re putting on the table, and in exchange, you get a defined reward if the market stays where you expect it.

3. Time decay works for you: Options are all about timing, and during this short session, theta decay (time decay) is your friend. The sold options will lose value quickly, adding to your potential gains without much effort. It’s like letting time work its magic while you sit back and enjoy.

It’s essential to play with risk control in mind in a market that's going through a correction.

The butterfly strategy during Muhurat trading lets you engage with the market while maintaining a balanced approach.

It’s not about chasing wild returns—it’s about smart positioning.

Trivesh D, COO, Tradejini

When it comes to Muhurat trading, there is no particular strategy to follow—it’s more about tradition than profits.

Investors tend to use this symbolic session to make small purchases in stocks they've been watching rather than engaging in active trading or making big plays.

It’s a time-honoured practice, and many buy a few shares to mark the occasion, focusing on sentiment over immediate returns.

Amit Golia, Group CEO, MarketsMojo

We recommend focusing on sectors that promise enduring relevance over the next two decades.

These include technology, healthcare, renewable energy, and infrastructure, each likely to drive significant value in a fast-evolving economy.

For investors interested in shorter to medium-term gains, consumer goods and consumer durables tend to be strong performers immediately following the festive season.

With increased consumer spending, many companies in these sectors often report their highest quarterly earnings during this period, which may lead to moderate gains in the coming months.

This approach allows investors to capitalize on immediate trends while positioning long-term investments for sustained growth.

Atul Parakh, CEO of Bigul

Because of the restricted trading timeframe, markets frequently encounter increased volatility during Muhurat trading.

It is recommended that although making money should not be the main goal. The event provides experienced and new investors with a special chance to participate in the market.

Investors are advised to take a long-range view when attending this session.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.