Mahurat trading is quite a tradition in India. Basically, during Diwali there is an hour of an auspicious trading which most investors anticipate. So far fin the last 8 to 10 years, BSE and Sensex have traded positively. So, there is an additional excitement along with the happiness of new clothes, lights, crackers, gifts, gold etc. Mahurat traditions have gained their limelight with the help of media exposure. But how far are they auspicious to you and your returns?
Analysts suggest that it is not the mahurat but the particular stock’s attributes as to your research into its past performance, profit ratio, the particular fund’s objectives etc. Most traders who trade during this mahurat period can be divided into 2 groups based on their objectives. One group may be interest in booking the profits that they earned in the intraday trading and usually, do not carry forward trades or they might also choose to buy and hold their stocks. Second group, may invest into long term stocks which they choose to combine as a part of their portfolio after making their lucky purchases.
Fund managers say that, although not many people may indulge into this opportunity of mahurat trading, there are investors who take this a bit seriously. They prefer buying stocks during that particular time and continue to hold those stocks at least for a year.
The reason why this mahurat trading should not be taken very seriously is because; greed can turn you upside down. It is a fact that markets may not perform well in that particular point of time. Investing large sums of money on just an assumption that your returns might double triple just by investing in that given good time may just not work out. For a better understanding here is an example, in 2001, the Sensex declined 1.8% on mahurat day and gained 7.73% a month later. But a decline is rare. Then, in 2008, the index gained nearly 6%, but in the month that followed gains were less than 1%. Getting yourself into debt like loans and personal loan etc to finance your requirements may not be the hassle you might not want yourself to get into.
Investing a token amount or a small insignificant portion of your funds during such mahurats, may be advisable. There is no harm in experiencing the thrill of the mahurat; however how much amount you wish to invest is what matters. However, considering your buying decision based on primary research and fundamental attributes are a prerequisite if you wish to include such toke investments a part of your portfolio in the long run. It is advised that any investor should look out for the benefit of investing in a fund for a long term since you never know when luck can be more favorable to you.
However for long term investors, mahurat trading may not bring about any significant changes to their portfolio. As said earlier, many financial advisors believe that it has become more of a tradition and does not hold any financial significance. Also, another notable fact is that these days from the traditional aspect, the charm of mahurat trading is wearing out. With the possibilities of online trading, the need for meeting financial advisors in person for any financial transactions is not all that necessary.
Having said the above, do not forget your main objectives. Stick to the fundamentals of savings and investments like choosing equity investments for long term growth, prudently following your Asset allocation, fundamental stock picking, concentrating on long term returns objectives; are a necessity since it is only these principles that guarantee a robust growth in your portfolio.