Nifty 50 Posts a Rare Decline on Special Diwali Trading

What happened in the Muhurat session

India's ceremonial Diwali trading hour flipped from green to red, with the Nifty 50 down 0.2% after being up as much as 0.4% earlier. The Sensex finished the special session close to flat.

Smaller and mid sized names led, with the Nifty Smallcap 250 up 1.2%. Big lenders including HDFC Bank, ICICI Bank, and Axis Bank pulled on the headline index.

How this breaks historical patterns

This was the first Diwali-day slide since 2017, snapping a streak that had seen seven straight gains. Over the past decade, markets have advanced in eight of the last 10 Muhurat sessions.

Set by the new moon, the brief window is seen as an auspicious time to begin investing and symbolically leave past losses behind. Trading will be closed on Tuesday for Diwali.

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Market momentum and the wider flow of money

Year to date, the benchmark is down over 4%, which puts it on track for its first annual drop in 11 years if that persists. Even so, momentum has flipped near term, with the Nifty up more than 8% last week, its strongest weekly rise since February 2021.

Jitters around the artificial intelligence trade that hurt stocks in the US and South Korea are seen redirecting attention toward India. Raamdeo Agrawal, chairman and co founder of Motilal Oswal Financial Services, said, "After two years of stagnation, the market has the potential to give investors bumper returns by next Diwali, because of confluence of low valuation and high earnings growth." Foreign investors have also turned net buyers, picking up $3.6 billion of equities so far in November and trimming this year's withdrawals to $26.8 billion.

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