Muhurat Trading Myths: Why 90% of Diwali Investors Follow the Herd

Sunday, Oct 19, 2025

Investors are scrambling to trade on Diwali Muhurat Trading every year as diyas illuminate homes and stock tickers turn green with candles: a ritual head start of the Samvat New Year. There are queries such as best stocks to buy before Diwali, best shares to invest before Diwali, and can I invest my money in Diwali on search engines.

However, there is a twist to it: more than 9 out of 10 Diwali investors are blindly doing what the crowd does, following what is trending, rather than investing in what is worthwhile. The shininess of Deepavali trade frequently clouds their fundamentals, and a rite of prosperity becomes a rut of repeated errors.

We can unravel the truth behind the Muhurat Trading myths, the psychology of crowdsourcing money, and why a diversified, professional approach such as that of Green Portfolio is the wiser thing to do as you invest this festive season.

What is herd mentality in Diwali investing?

The herd mentality in Diwali investing is where investors make decisions not because it is the correct thing to do but because everyone is doing it. It is that slight nudge when your WhatsApp group reminds you all; everybody is buying these best Diwali stocks - hurry up before the Muhurat session closes!

Why does this happen during Diwali?

Over 3 crore new demat accounts were opened in India over the last few years.
During Muhurat Trading 2023, NSE and BSE recorded one of the highest retail participation spikes - most of them chasing “top Diwali stocks to buy.”
Popular searches like “best penny stocks for Diwali” or “muhurat share to buy” trend every year, proving that sentiment-not research-drives action.

Common festive mistakes:

All-in gold syndrome: Many investors buy only gold ETFs or jewellery because “gold never loses value.” But timing matters-even gold cycles correct.
Panic buying: Investors buy trending stocks like firecrackers-exciting, noisy, and often short-lived.
Ignoring fundamentals: Buying because it’s Diwali, not because it’s a good business, is like lighting diyas without checking if there’s oil in them.

Why do most investors follow the crowd during festivals?

The answer lies in psychology, culture, and community pressure.

1. Fear of Missing Out (FOMO)

The biggest emotional driver is the feeling of being left behind. When everyone’s talking about the “best shares to buy this Diwali,” nobody wants to be the only one not profiting.

Example
A trader sees friends buying “Diwali best stocks to buy” like HDFC Bank or Infosys. Even without understanding valuations, he joins in-just to not miss out.

2. Social Proof

Humans are wired to assume that if everyone’s doing it, it must be right. The more people invest in certain “best stocks to invest before Diwali,” the stronger the urge to join in.

Festive Parallel
Just like lighting diyas because everyone does-it feels good, communal, and symbolic. But the stock market isn’t symbolic-it’s strategic.

3. Cultural Tradition

In India, Diwali Muhurat Trading is seen as auspicious. Families treat buying a share as they treat lighting the first diya-something that ensures prosperity. This cultural weight reinforces herd behavior.

4. Media and Market Noise

TV anchors shout, “These are the top 5 Diwali stocks to buy now!” Influencers post reels about “stocks to buy before Samvat 2082.”
When such noise dominates screens, rational thinking fades.

5. Emotional Decision-Making

Festivals elevate dopamine and optimism. People feel lucky and hopeful, which translates into riskier, unresearched decisions.

What does contrarian investing look like during Diwali?

While most investors chase the “best Diwali stocks” or “stocks to buy this Diwali,” contrarian investors quietly buy unpopular but fundamentally strong businesses.

Example 1:
In Diwali 2020, while everyone chased tech stocks, a few contrarians accumulated capital goods and PSU stocks-those later outperformed by 2022.

Example 2:
In 2018, when midcaps were everyone’s favorite, contrarians rotated to large-caps at fair valuations. History rewarded patience.

Contrarian framework for festive investing

Step	Contrarian Approach	Herd Approach
Research	Analyze intrinsic value	Follow TV tips
Timing	Accumulate during low hype	Buy during peak buzz
Emotion	Calm, data-driven	Excited, impulsive
Result	Long-term compounding	Short-term excitement

How can you identify herd behavior in markets?

If you can see the crowd, you can avoid it. Here’s how to detect herd zones in the stock market:

1. Sentiment Indicators

When everyone’s bullish, caution should rise. Look for:

Put/Call ratio extremes
Investor surveys showing 90% optimism
Record new demat accounts in a single week

2. Social Media Trends

When hashtags like #BestStocksToBuyThisDiwali or #DiwaliStockTips flood timelines, that’s often a sign the crowd is at its peak optimism.

3. Search Volume Spikes

Google Trends data during Diwali shows massive spikes for:

“Stocks to buy on Diwali”
“Best stocks for Samvat 2082”
“Top Diwali Muhurat Trading stocks”

What should independent Diwali investors focus on instead?

The goal isn’t to avoid Diwali investing-it’s to do it wisely.

1. Focus on diversification, not popularity

Don’t just buy “Diwali best stocks.” Diversify across:

Large-caps for stability
Mid-caps for growth
Gold & silver for balance
Debt for protection

2. Think long-term wealth creation

While the herd seeks “quick profits during Muhurat Trading”, independent investors focus on Samvat-to-Samvat wealth creation, not just one-day returns.

Analogy:
The herd lights firecrackers (short burst, quick bang).
Independent investors light diyas (steady glow, lasting light).

3. Prefer professional portfolio management

Professional managers like Green Portfolio follow disciplined processes:

Fundamental and quantitative analysis
Risk-adjusted asset allocation
Emotional detachment

How does the Samvat 2082 approach avoid herd mentality?

At Green Portfolio, our philosophy for Samvat 2082 emphasizes balance, diversification, and discipline-core traits that counteract herd behavior.

1. Multi-Asset Allocation

Instead of chasing single-theme Diwali stocks, we recommend:

10% Gold – inflation hedge, safety net
10% Silver – industrial upside
80% Diversified Equity – across sectors, market caps, and geographies

This diversified “Samvat 2082 Portfolio” balances risk and opportunity-something herd investors miss entirely.

2. Sector Diversification

Crowds usually chase “hot sectors” (IT in 2020, PSUs in 2023, EVs in 2024).

Our strategy: balance across cyclicals, defensives, and growth sectors.

Category	Example Sector	Rationale
Defensive	FMCG, Pharma	Stability
Cyclical	Metals, Infra	Growth phase capture
Innovation	Tech, EV, Renewable	Long-term potential

3. Systematic, Not Emotional

Our quantitative filters remove emotional biases, ensuring:

Consistent returns over multiple Samvats
Controlled drawdowns
Better compounding

This approach helps investors enjoy Diwali without anxiety -their portfolios already have discipline built in.

Is Diwali Muhurat Trading really profitable?

Historically, yes-but not guaranteed.

Looking at Muhurat Trading performance in the last 10 years, markets have closed positive in most sessions. But the average gain is less than 1%. That means-it’s symbolic, not strategic.

Year	Nifty Change (Muhurat Day)	Trend
2015	+0.52%	Positive
2016	+0.75%	Positive
2017	-0.62%	Negative
2018	+0.80%	Positive
2019	+0.45%	Positive
2020	+0.47%	Positive
2021	+0.49%	Positive
2022	+0.88%	Positive
2023	+0.59%	Positive

Insight:
Yes, Diwali brings joy-but it doesn’t guarantee profit. It’s the discipline after Diwali, not the Muhurat itself, that creates wealth.

Why is herd investing dangerous during festivals?

The festive mood convinces investors that luck is strategy. But markets don’t reward emotions-they reward preparation.

Risks of herd investing:

Overpaying for overhyped stocks
Neglecting portfolio balance
Emotional panic when trends reverse
Short-term thinking replacing financial goals

How can you invest smartly this Diwali?

Here’s a simple 3-Step Green Portfolio Guide to avoid herd mistakes this festive season:

1. Review Your Goals

Ask: Why am I investing this Diwali?
If the answer is “because everyone else is,” pause.
If it’s “to create wealth over Samvat 2082 and beyond,” proceed-with planning.

2. Choose Quality Over Quantity

Instead of 10 random “Diwali stocks to buy,” focus on 3–4 fundamentally strong names, or better- a managed smallcase or portfolio that’s already diversified.

3. Partner with Professionals

Green Portfolio’s Smallcases are designed exactly for investors who want:

Expert research
Diversified exposure
Consistent compounding
Freedom from herd anxiety

Our Entry Point for Hesitant Investors Smallcase helps those unsure about where to start during Diwali. It’s built to enter markets systematically-without emotional decisions.

What’s the real meaning of Diwali investing?

True Diwali investing isn’t about speculation-it’s about illumination. It’s about bringing light to your financial life through clarity, not confusion.

Key lessons:

Don’t chase “best Diwali stocks to buy”; chase sustainable businesses.
Don’t follow the herd; follow your plan.
Don’t invest emotionally; invest intentionally.

When you replace FOMO with framework, you turn Diwali from a one-night trading ritual into a lifetime wealth-building habit.

How can Green Portfolio help you invest independently this Diwali?

At Green Portfolio, we believe in anti-herd investing. Our focus is on rational, research-backed, and disciplined portfolio management-especially during emotional market phases like Diwali.

Our Differentiators:

Professional Portfolio Management: Tailored strategies for each investor’s risk profile.
Thematic Smallcases: Such as “Entry Point for Hesitant Investors”-perfect for beginners wanting a safe, systematic start.
Evidence-Based Approach: We use data, not hype.
Long-Term Focus: We think in decades, not festivals.

When the market chases “best stocks to buy this Diwali,” we’re busy finding best stocks for the next decade.

Final Thoughts: Should you invest during Muhurat Trading?

Absolutely - but do it the right way.
Celebrate the ritual, but avoid ritualistic investing.

So this Diwali:

Light diyas for prosperity, not panic buying.
Buy quality, not popularity.
Choose professional management over peer pressure.

Key Takeaways for Diwali 2025 (Samvat 2082)

Myth	Reality
Muhurat Trading guarantees profit	It’s symbolic, not strategic
Everyone buying Diwali stocks = good signal	It’s a sign of crowd euphoria
Gold alone is safe	Diversification is safer
Media tips are reliable	Research and discipline matter more
Short-term Diwali gains create wealth	Long-term consistency does