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A man looks at a screen across the road displaying the election results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai May 16, 2014.Reuters file

The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) will conduct an hour-long trading session to mark the auspicious day of Diwali on Wednesday. The special trading session will be held between 5 pm and 6.40 pm on Wednesday.

"A special live trading session shall be held on Wednesday, November 07, 2018 on account of Muhurat trading on Diwali. "All trades executed in this Diwali Muhurat trading session shall result in settlement obligations," an NSE circular said.

Let's break down the Diwali Muhurat trading.

What is Muhurat Trading?

Muhurat trading is a specially conducted trading session to mark Diwali. It also symbolises the beginning of a new year or 'Samvat' for Gujaratis and Marwaris - two communities that dominate the stockbroking market in India. According to the belief of the communities, the muhurat trading brings wealth and prosperity.

When did it first happen?

The special muhurat session was first organised by the BSE in 1957 and has been there since 1992 in NSE. Markets generally end on the greener side as the investors prefer buying rather than selling their stocks.

How did stocks perform during last year's trading?

Generally, the stock markets end of a higher note during the muhurat trading but there have times when it ended in Red. Since its beginning traders have registered losses only on four occasions.

Unfortunately, in 2017, the traders incurred losses due to multiple factors like the Punjab National Bank (PNB) scam, a decline in mid and small-cap stocks, the introduction of additional surveillance measures on select stocks, trade war, crude surge, and rupee depreciation.

What can we expect this year?

Since there is only one full day trading session day left in the week with Wednesday's one-hour session discounted and Thursday being a trading holiday, the market is expected to continue rangebound trade. Any major shift in the Sensex is unlikely given these conditions