Historical Performance of Nifty and Sensex on Diwali Day

Diwali is the most important festival in India, and it also holds a special place in the stock market. Every year, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) open for a one-hour special trading session called Muhurat Trading. This session marks the beginning of the new Hindu financial year, known as Samvat. Traders, investors, and institutions take part in this session to make small, symbolic trades that represent good fortune and prosperity for the coming year.

Even though the session lasts for just an hour, it often attracts heavy attention. Over the years, market behavior during this session has built an interesting history. Let’s look at how the Nifty 50 and Sensex have performed on Diwali day over the years, the patterns behind their movements, and what happened in the latest Diwali muhurat session in 2025.

What Muhurat Trading Means

The word muhurat means an auspicious or lucky time. Traders believe that investing money during this period brings success and wealth. Many investors buy at least one share or a small quantity of gold on this day as a good luck gesture.

The muhurat session usually lasts for one hour in the evening. Market activity stays lighter than on a regular trading day, but the excitement and positive sentiment are strong. Brokers decorate their offices with lights and flowers, and some investors even perform Lakshmi Puja before placing their trades.

How the Market Usually Behaves on Diwali

If we look at Diwali trading over several decades, a clear pattern appears. The Sensex and Nifty usually end the muhurat session in positive territory. The reason is simple — more people buy than sell. Investors start the new financial year with optimism, so they prefer to buy stocks, even if in small quantities.

From the 1990s to now, markets have shown positive returns on Diwali day most of the time. Out of about 20 recent years, the indices closed higher in roughly 16 of them. That means around 80% of the time, the markets end the session on a good note. However, the gains are usually small — between 0.2% and 1% on average. These gains reflect mood and sentiment rather than long-term fundamentals.

Historical Performance of Nifty and Sensex on Diwali

Let’s look at the performance of both indices over the past several years:

This table shows that in the last 11 Diwali sessions, the Nifty and Sensex ended higher in nine years and lower in two. The average return stayed around 0.4% to 0.5%, which matches the long-term pattern.

What Happened in Diwali 2025 Muhurat Trading

The most recent Diwali muhurat trading took place on 21 October 2025, marking the start of Samvat 2082. During this session, both benchmarks continued their positive trend.

• Sensex closed at 84,426.34, up about 0.07%.

• Nifty 50 closed at 25,868.60, up about 0.10%.

Although the rise was small, the session stayed upbeat. Traders showed fresh buying interest in banking, consumer, and infrastructure stocks. Strong quarterly earnings and steady global cues also helped lift the mood.

Analysts said that investor confidence grew because foreign investors had returned to Indian markets in October. Global markets were stable, and domestic demand looked strong during the festive season. Retail investors also participated actively, especially in midcap and small-cap stocks, which saw better gains.

Why Markets Usually Rise on Diwali Day

Several reasons explain why markets often rise on Diwali day:

1. Positive Sentiment: Diwali is the festival of wealth and prosperity. Traders start the new year with hope and confidence. This mood naturally creates more buying pressure.

2. Low Volume Effect: Since the muhurat session lasts for just an hour, trading volumes remain low. Even small buy orders can push prices up.

3. Traditional Buying: Many families buy at least one stock or a token amount of gold during Diwali. This symbolic act adds to overall demand.

4. Institutional Participation: Many brokerage houses and mutual funds take small positions for ceremonial reasons. That too adds to upward movement.

5. Market Momentum: When markets already move in a positive trend before Diwali, traders use the muhurat session to continue the momentum.

When Diwali Days Turn Negative

Not every Diwali brings gains. Some years show red on the screen because larger market trends overpower festive sentiment. For example:

• In 2007, the market was under pressure from global credit worries.

• In 2016 and 2017, global cues were weak, and investors booked profits after strong rallies.

In those years, the muhurat session ended lower, showing that rituals cannot overcome strong negative global or domestic factors.

Broader Lessons from History

Looking at data since the 1990s, we can draw a few clear lessons:

1. Diwali Gains Are Usually Small: The average return of around 0.4% to 0.5% is not large. The moves reflect sentiment, not new information.

2. Ritual Drives the Trade: The positive bias mostly comes from traditional and emotional buying rather than fundamental triggers.

3. No Predictive Power: A positive Diwali does not guarantee a positive year ahead. Some years saw gains on Diwali but corrections soon after.

4. Long-Term Investing Wins: Investors who buy quality stocks during Diwali and hold them for the long term often benefit more than short-term traders.

Diwali 2025 Context: Market at Record Highs

The 2025 Diwali session happened when both benchmarks traded near record highs. Nifty hovered near the 26,000 level, and Sensex stayed around 84,000. Over the year, the market gained more than 14% thanks to strong GDP growth, steady foreign inflows, and cooling global inflation.

During Diwali week, analysts noted strong consumer spending across India. Festive sales in automobiles, electronics, and gold reached record levels. This healthy demand supported investor confidence and helped the market sustain its positive tone during muhurat trading.

However, experts also reminded traders that valuations were getting high. They advised caution and suggested focusing on long-term quality stocks instead of chasing short-term momentum.

What Investors Should Do on Diwali

Investors should treat Diwali as a time to review, plan, and rebalance their portfolios. Here are a few sensible steps:

1. Rebalance Investments: Check if your portfolio matches your risk level and goals. Trim overvalued positions if needed.

2. Start Systematic Investments: Begin or increase SIPs in equity mutual funds or index funds. Starting on Diwali gives a symbolic and disciplined start.

3. Avoid Overtrading: Do not treat the one-hour session as a place to make big profits. Use it to mark good beginnings, not to gamble.

4. Focus on Fundamentals: Pick stocks of companies with strong earnings, low debt, and clear business models.

5. Stay Patient: Long-term investing always gives better results than short-term excitement.

Final Thoughts

The Diwali muhurat session is more than just a trading event. It represents the spirit of optimism and renewal that Diwali brings. Over the years, the Nifty and Sensex have delivered positive returns most of the time on this day, but those gains stay modest. The small rally usually comes from emotional buying and low-volume effects.

The 2025 Diwali session continued this tradition with small but steady gains. Markets started the new Samvat on a happy note, backed by solid fundamentals and festive energy.

Still, investors should remember that Diwali day trading is symbolic. It should inspire discipline and long-term thinking, not short-term bets. Prosperity in markets comes not from luck or rituals but from patience, research, and consistency. Diwali is a good time to make that promise for the year ahead.

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