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Markets open strong ahead of Muhurat Trading as Nifty rises 114 points and Sensex jumps 315 points. Experts advise caution, predicting volatility throughout the trading session
On Monday morning, Indian equity markets kicked off the week on a firm note. The Nifty 50 index registered a gain of approximately 114 points (up ~0.45 %) and the BSE Sensex rose about 315 points (~0.38 %) at the start of trade ahead of the Muhurat session on Tuesday.
This early up‑move is being driven by a combination of domestic buoyancy, festive season optimism, and positive global cues — but analysts are simultaneously flagging heightened volatility in the hours ahead, given the shortened trading week and the special one‑hour session of Muhurat trading.
What’s Behind the Upturn?
Several factors are at play here:
- Festive sentiment & consumer optimism: As the country enters the Diwali season, there is a general uptick in retail activity, consumption expectations and a feel‑good factor that often spills into equity markets. The Daily Jagran reference noted this specifically: “Stock markets opened higher ahead of Diwali … driven by festive consumer spending and investor optimism.”
- Technical breakout in indices: According to analysts quoted in the Reuters/LatestLY story, the Nifty had made a breakout from a ~160‑day channel pattern, suggesting next leg of a rally might be in motion if support holds.
- Global tailwinds: While not the prime driver today, recent easing of global trade tensions, hopes of monetary policy relief and foreign investor interest are supporting sentiment. (Will be discussed further below.)
- Shortened calendar & trading psyche: Because of Muhurat trading and a truncated week (markets will be closed next day or only limited sessions), there is an element of “buy‑first / hedge / profit‑book early” dynamic that adds impetus.
The Role of Muhurat Trading
Muhurat Trading is a symbolic session held during Diwali where the markets open for a brief period in the evening, considered auspicious for starting new ventures. While the session lasts only about an hour, its significance is cultural as well as financial. The fact that markets are moving ahead of the session adds to the festive fever on Dalal Street.
Because of this event:
- Traders may build positions early to participate,
- Some may trim holdings early for risk management,
- Unique liquidity and flows may show up, and
- Market breadth and sectoral movement may diverge from normal sessions.
Experts’ Caution: Volatility Ahead
Despite the cheerful opening, market watchers are sounding caution. Key points:
- With the Nifty and Sensex rallying ahead of a holiday session, profit‑booking risk is elevated. Some participants may “load up” now and off‑load later.
- Technical resistance lies in play: one analyst noted the Nifty was “consolidating between its key resistance at ~25,650 and support at ~24,500” — a break below support or above resistance could trigger significant moves.
- The volatility index (India VIX) often rises in such shorter‑session, event‑driven periods, signalling caution among participants. (A previous example: VIX rose ~1.18 % when Sensex jumped ~315 pts. Capital Market )
- External shocks (global cues, policy surprises, commodity/FX moves) could trigger sharper intra‑day swings because risk premia are elevated.
What to Watch During the Day
Given the expected volatility and the festive context, market participants should monitor:
- Opening moves – whether momentum continues or stalls early.
- Volume & breadth – True rally should see broad participation; narrow leadership may signal caution.
- Global cues mid‑day – US data, Asian market closes, currency and commodity moves remain important.
- Positioning into Muhurat – Are funds/heavy traders lightening ahead of the session? Watch for swings.
- Support/resistance – On technicals, if Nifty holds above ~24,500 and pushes past ~25,650, that’s bullish; else risk of retracement. (According to one analyst)
- Volatility measures – A rise in India VIX suggests risk‑aversion creeping in; a fall may hint at smooth sailing.
- Sector rotation – From euphoria into cautious phase; witnessing rotation can help tactical trades.
Underlying Risks
While the mood is upbeat, several risks remain:
- Global uncertainty: Geopolitical risks, US monetary policy surprises, external flows may reverse fast.
- Corporate earnings surprises: Since the market is factoring in positive earnings, any disappointment could lead to sharp correction.
- Liquidity & seasonal effects: With shorter trading hours next day, liquidity may thin, making swings more pronounced.
- Valuation stretch: With many stocks already up ahead of Diwali, the margin for error is lower.
- Profit‑taking pressure: Some participants may look to lock in gains ahead of the holiday, leading to choppy movements.
Longer‑Term View
If markets sustain the current momentum, it could signal a fresh leg of the rally, especially as domestic economic data remains supportive and corporate capex/consumption themes play out. The breakout from a multi‑month channel as flagged by analysts provides a structural bullish underpinning.
However, the onset of volatility suggests that the journey may be bumpy — making stock‑selection, risk‑management and timing more important than ever.
Conclusion
The strong start to the week on Dalal Street — with the Nifty up ~114 points and the Sensex up ~315 points ahead of the Muhurat Trading session — reflects a potent mix of festive optimism, technical breakout and positive sentiment. But the caveat is loud and clear: volatility is expected.
For investors and traders alike, the non‑standard trading calendar, cultural significance of Muhurat, and global‑domestic interplay call for a balanced approach: participate in the up‑move, but respect risk, use protective tools, and be ready for swift reversals. Whether this marks the opening of a new leg of the bull run, or a short‑lived burst ahead of consolidation, will depend on how sentiment, structure and surprises align in the next 24‑48 hours.
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