Fortune favours those who plan for the future

This proverb is manifested by billions of Indians during Diwali, the festival celebrating the victory of light over darkness, good over evil, and knowledge over ignorance. 

One of the most anticipated festivals for Indians, Diwali also has a strong influence on our perception of wealth and finance. People wash coins in milk and water and worship Lakshmi, the goddess of wealth during the auspicious day of Dhanteras.

The financial year as per the Vikram Samvat calendar also renews during Diwali. Many consider the start of the Samvat calendar to be highly auspicious and investors prefer to make long-term investments on this day. 

Equity markets conduct a symbolic one-hour trading session called ‘Muhurat Trading’ on this day every year. In the last 5 years, Sensex and Nifty have shown robust growth YoY from Samvat to Samvat and one hopes this cycle won’t be any different.

Diwali is a festival of new beginnings. It also offers the opportunity to learn some key lessons and share experiences that you can put into action to improve your financial well-being. 

Some of our smallcase managers have shared their Diwali stories and Muhurat Trading experiences below.

Earliest memories of Muhurat Trading Experience

Alok Jain, Founder – WeekendInvesting and Arvind Kothari, Founder – Niveshaay recollect the times when online broking was still very new and one would find themselves on the trading floor among different communities of investors, wishing each other Diwali greetings, discussing stocks and taking in the positive festive vibes. Those days also saw significant market moves as compared to more recent years.

Making it a tradition to invest or trade in stocks every Diwali

Divam Sharma, Co-Founder – Green Portfolio and Abhishek Jadon, VP – Windmill Capital religiously make a token investment during every Muhurat session, believing it to be the most auspicious occasion on Dalal Street. Divam adds that with a renewed belief that Samvat and maybe the coming 10 years are going to be really special for Indian market investors, there’s excitement and opportunities that one can already smell in the air. 

Reminiscing the excitement the followed the first Diwali stock pick

Sonam Srivastava, Founder – Wright Research remembers buying Indo Count Industries Limited (ICIL) as an early pick back in 2013 whereas Arvind Kothari recalls buying ITC Limited (ITC) back in the day, well before it gained popularity during recent times. Alok Jain has a different approach. He remembers buying Reliance Industries Ltd (RELIANCE) a day before Muhurat Trading and booking profits on it the next day. Most people start the session with some buying and by the end of it there is profit booking most times, he says.

Strategies for investing during this Diwali Muhurat

Divam Sharma is bullish on opportunities in the small and midcap space, particularly ethanol, 5G, and auto sectors and has also launched a Diwali Samvat smallcase with high conviction stocks from these sectors.

Sonam Srivastava wishes to focus on consumer driven sectors which tend to outperform during festivals.

Diwali or no Diwali, Arvind Kothari plans on sticking to the process of fundamental and scuttlebutt approach and hope for good results to follow.

Bringing luck in your corner and navigating market unpredictability & herd mentality during Muhurat Trading

Alok Jain reasons that Deepawali being a cultural event is auspicious and brings out positive energy in most but statistically is just another day where herding of calls and picks can be damaging to the buyer. 

Abhishek Jadon feels that more than bringing luck, Muhurat hour invokes that feel good factor when starting a new investment brings in hope of making profits in the next Samvat, even if one has made a loss over the previous Samvat.

Arvind Kothari believes that a little bit of luck on one’s side is always helpful, and if Muhurat trading is an opportunity to bring luck in our favor, then why not believe it? In fact, the Niveshaay team have also placed a sign in their office which says, “GOD and GOODLUCK give extra 5% CAGR returns”

Some advice for Muhurat Trading first-timers

One should take a buy/sell/book profit action just to keep the trade alive, without trying to take a strategic point of view, says Alok Jain. 

Divam Sharma says keep looking at the fundamentals and not change your investment style or strategy just based on some short-term market factors. Look straight and don’t be swayed.

Sonam Srivastava urges news investors to use this occasion as a step to make their first investment and trust them to bring prosperity with a long term vision.

Arvind Kothari advises caution towards unsolicited emails and messages containing trade ideas, where investors must be careful about what they act upon because trading with herd mentality and blind faith even on an auspicious day might leave their portfolio inauspicious.

Abhishek Jadon asks new investors to keep things simple and invest in an ETF which tracks a large-cap index or a bond ETF which provides more stability. They can consider investing in a gold ETF as well, keeping up with the tradition of buying gold during Diwali.

Diwali stock picks popular among both, old and new investors on Dalal Street

Stocks from Auto, pharma, chemicals and large IT can be looked at, says Alok Jain. WeekendInvesting’s Mi_NNF10 Momentum smallcase tracks 10 stocks from NIFTY NEXT 50 and has a 2-year CAGR of 34.32%

Divam Sharma & the team at Green Portfolio like Dalmia Bharat Sugar, Exide, Valiant Organics, Sterlite Tech and Mahindra CIE. Invest in these plus other complementing stock picks through their High Quality Right Price smallcase.

Sonam Srivastava picks Axis Bank, Bajaj Finance, HUL, Jubilant, Kalyan Jewellers as her choices this Diwali. The Wright in New India smallcase invests in companies across Banking, FMCG, Consumer Discretionary + 8 other complementing sectors, benefitting from PLI, China+1 and Make In India. 

Arvind Kothari is very positive on consumption stock ideas and Borosil ltd. is one of them. The name Borosil is synonymous with the consumer house-ware industry with the company commanding a 60% market share in microwaveable and heat-resistant glassware products. In fact, it was also a part of Niveshaay’s Mid and Small Cap smallcase and generated 53% returns when present in the smallcase portfolio.

Abhishek Jadon reiterates ETFs being the choice this Diwali for new investors and get exposure to Gold + Equity via their Equity & Gold smallcase. Festive season also favors an upswing for consumer brands, especially household favorites. One can invest in such stocks via their Brand Value smallcase.

Weekend Investing

1. What memories do you have of your first Diwali Muhurat trading experience?

It was in 1996 and online trading itself was new. I recall that the session used to be extremely well attended by walk-in clients at the office as well as significant market moves in that period as compared to more recent years.

2. Do you make it a point to trade every Diwali? How auspicious is the occasion?

Yes, Deepawali remains an extremely auspicious occasion and I was a discretionary investor/trader back then and made sure that I am booking some profits on this day.

3. What was your first Diwali pick?

I remember buying some Reliance a day before and booking profits. Most people start the session with some buying and by the end of it there is profit booking on most years. 

4. What would be your trading/investing strategy this Diwali?

As mentioned earlier, trying to short the market on open and cover at close could be a trading strategy. For delivery players buying popular stocks in the previous session and selling in the muhurat session can be a strategy.

5. Whether it is trading or investing, there is always an element of luck involved due to the sheer unpredictability of market behavior and herd mentality. In this context, do you see Muhurat trading as an opportunity to bring luck in your favor?

Deepawali as a cultural event is auspicious and brings out positive energy in most. But statistically it is another day and any herding of calls and picks can only be damaging to the buyer.  

6. What would be your advice to new investors for the Muhurat trading day?

There should be some token buy sell / book profit just to keep the trading alive but other than that i don’t see Muhurat session as having any special significance from a strategy point of view.

7. Diwali stock picks are very popular among both new and old investors on Dalal Street. Any ideas you would like to share with us?

Since we do non discretionary investing we don’t have individual calls as such but yes almost all our strategies are deployed fully and the leading sectors have been from auto pharma and chemicals. A dark horse bet can be that on large IT stocks

Green Portfolio

1. What memories do you have of your first Diwali Muhurat trading experience?

It’s always a lot of excitement and opportunities that you smell in the air. This Samvat and maybe the coming 10 years are going to be really special for Indian market investors, so it is going to be auspicious if you buy good companies any day for the next few years.

2.  Do you make it a point to trade every Diwali? How auspicious is the occasion?

The Diwali Days are considered auspicious and it’s a happy and divine feeling in those days. You create your investment portfolio with a lot of research and efforts and you really care about your investments. These are times when topping up your portfolio on this auspicious day gives you a new positive vibe to your portfolio and your high conviction stocks. Most of the years, on Muhurat Trading, we have done some token investments in our PMS and personal accounts.

3. What was your first Diwali pick?

It was SRF, that time I had very less capital, but that trading window, I am very excited, mostly glued to the business channels and hearing the experts and their Conviction.

4. What would be your trading/investing strategy this Diwali?

We have launched a Diwali Samvat Smallcase where we have put our high conviction stocks for our investors to top up. Currently, we see lots of opportunities in the small and midcap space, particularly ethanol, 5G, and auto sectors.

5. Whether it is trading or investing, there is always an element of luck involved due to the sheer unpredictability of market behavior and herd mentality. In this context, do you see Muhurat trading as an opportunity to bring luck in your

favor?

Ultimately, in investing it is about discipline and conviction. If your conviction is not 100%, and you are not disciplined, you will tend to change your course and be un decisive with the short-term market events. Muhurat trading will not bring that change, maybe that vibe can create some impact for a few days. Ultimately, it’s about looking straight and not being swayed by short ever evolving macro factors.

6. What would be your advice to new investors for the Muhurat trading day?

There are times when everything looks rosy and making money from markets is easy and there are times when there are lots of headwinds for the markets. As an investor, you have to keep looking at your portfolio company’s fundamentals and not change your investment style or strategy just based on some short-term market factors. Always think, these times too will pass.

7. Diwali stock picks are very popular among both new and old investors on Dalal Street. Any ideas you would like to share with us?

We like Dalmia Bharat Sugar, Exide, Valiant Organics, Sterlite Tech and Mahindra CIE

Wright Research

1. What memories do you have of your first Diwali Muhurat trading experience?

I think I have a very unique experience where I first encountered Muhurat trading actually working on the algo team of a broking trading desk. Muhurat trading is a unique day which makes lives tricky for technology driven trading professionals. We have to work extra hard that too on Diwali day to make sure systems work properly.

2. Do you make it a point to trade every Diwali? How auspicious is the occasion?

I try not to be biased by the occasion but let data and methodology define my trading. Still Diwali is an auspicious day where you see price movement to have a higher call and I love the celebratory event that it becomes.

3. What was your first Diwali pick?

I remember buying Indo Count Industries Limited as an early pick in 2013.

4. What would be your trading/investing strategy this Diwali?

We will try not to be biased by the festivities except for the fundamental rationales for change. We will focus on consumer driven sectors which tend to outperform during festivals.

5. Whether it is trading or investing, there is always an element of luck involved due to the sheer unpredictability of market behavior and herd mentality. In this context, do you see Muhurat trading as an opportunity to bring luck in your favor?

We always wish for Diwali to bring in Luck, specially in today’s market when volatility has become the norm. We keep our decisions data driven though.

6. What would be your advice to new investors for the Muhurat trading day?

Use this occasion as a step to make your first investment. Trust your investments to bring prosperity with a long term vision

7. Diwali stock picks are very popular among both new and old investors on Dalal Street. Any ideas you would like to share with us?

Axis Bank, Bajaj Finance, HUL, Jubilant, Kalyan Jewelers 

Niveshaay

1. What memories do you have of your first Diwali Muhurat trading experience?

My first Muhurat trading experience happened a lot before online broking prevailed. I remember we used to gather at the broker’s office, meet other people from the community at the trade floor, exchange Diwali wishes and discuss various stocks alongside. It was a crazy, different experience altogether and the positive vibes around the festival still remain unmatched.

2. Do you make it a point to trade every Diwali? How auspicious is the occasion?

Long-term investing doesn’t involve a lot of trading. This fits with our point to not trade every Diwali. But this doesn’t take away how auspicious the occasion is. Generally, people make new purchases and big investments during the time of Diwali. Muhurat Trading is a special one-hour window open during the day of Diwali reflecting the shades of religion and culture. It is a decades old tradition practiced with a lot of faith and enthusiasm. It is considered very auspicious as investors believe that it will bring prosperity and yield fruitful returns.

3. What was your first Diwali pick?

It took me some time to recall but the first Diwali pick was today’s one of the most discussed stocks on social media, ITC ltd.

4. What would be your trading/investing strategy this Diwali?

Diwali or no Diwali, the strategy remains really simple. It is to scrub through the business as clean as we can and see if it deems fit for investment. We believe in the process of fundamental and scuttlebutt approach and this Diwali too we’ll stick to our process and hope for good results to follow.

5. Whether it is trading or investing, there is always an element of luck involved due to the sheer unpredictability of market behavior and herd mentality. In this context, do you see Muhurat trading as an opportunity to bring luck in your favor?

No doubt about market unpredictability given the uncertainty around the world, but our bet is on India and we believe that compared to other countries, strong tailwinds are really in India’s favor. India is going to emerge as a shining beacon amid the dark forces across the world. Though we are fundamentally well placed, a little bit of luck on our side will always be helpful and if Muhurat trading is an opportunity to bring luck in our favor, why not? We also have placed this sign in our office, “GOD and GOODLUCK give extra 5% CAGR returns”.

6. What would be your advice to new investors for the Muhurat trading day?

People will come across unsolicited emails and messages containing trade ideas to buy or sell but investors must be careful about what they act upon because trading with herd mentality and blind faith even on an auspicious day might leave your portfolio inauspicious. Also, since the Muhurat trading window is open only for an hour, it becomes important to research the stocks well in advance before investing. Be diversified, be diligent and be prepared.

7. Diwali stock picks are very popular among both new and old investors on Dalal Street. Any ideas you would like to share with us?

If you look around the festival season which starts in mid-August and runs long till early March and when matched with the history of how consumption has progressed over the years, we believe that this year is going to be no different. We are highly positive on consumption stock ideas and Borosil ltd. is one of them. The name Borosil is synonymous with the consumer house-ware industry with the company commanding a 60% market share in microwaveable and heat-resistant glassware products over the last few years. The robust CAPEX plans and upcoming demerger make Borosil ltd. our Diwali pick.

Windmill Capital

1. What memories do you have of your first Diwali Muhurat trading experience?

The highlight of any Diwali Muhurat trading hour is the optimism and positive energy that floats around. So the first Muhurat trading experience was likewise, which was full of hope and optimism.

2. Do you make it a point to trade every Diwali? How auspicious is the occasion?

I make it a point to make a token investment during every Muhurat session. I believe it’s the most auspicious occasion on Dalal Street. 

3. What was your first Diwali pick?

4. What would be your trading/investing strategy this Diwali?

There is no particular strategy except to invest in fundamentally sound companies which I think have a medium to long-term moat built into their business models.

5. Whether it is trading or investing, there is always an element of luck involved due to the sheer unpredictability of market behaviour and herd mentality. In this context, do you see Muhurat trading as an opportunity to bring luck in your favour?

I wouldn’t say so. More than bringing luck, it gives you that feel good factor by starting a new investment during the Muhurat hour. Even if one has made a loss over the previous Samvat, the Muhurat hour still brings in hope of making profits in the next Samvat.

6. What would be your advice to new investors for the Muhurat trading day?

New investors should look to keep things simple. Therefore, they can invest in an ETF which tracks a large-cap index or a bond ETF which provides more stability. They can consider investing in a gold ETF as well, which would give them a head start and also keep up with the tradition of buying gold during Diwali. For an all in one approach, they can consider investing in low-cost smallcases like Top 100 Stocks and Equity & Gold created by Windmill Capital.

7. Diwali stock picks are very popular among both new and old investors on Dalal Street. Any ideas you would like to share with us?

Realty Tracker – We are witnessing strong demand from residential, commercial, and retail space which is a great motivator for one to be constructive on this sector.

Infra Tracker – A strong impetus from government policies is one of the main growth drivers for the infrastructure industry in India. 

FMCG Tracker – This industry could benefit on the back of defensive buying. Amidst a volatile environment, geopolitical tensions, hot inflation, and weak INR FMCG could well be a market favourite.

Electric Mobility – Yet another sector where the government’s push has moved the needle and a lot of incentives have been provided in order to nudge folks to buy an EV. This is definitely an interesting space to look at.  

Specialty Chemicals – Benefitting hugely from China+1 strategy, with India having an opportunity to present herself as an alternate destination for major chemical raw materials.

Brand Value – All time favorite aspirational brands loved by the consumer segment in India.