Muhurat Trading vs. Mutual Fund SIPs: Which Builds Wealth Better Over Time

Introduction

In India, "Muhurat"holds an auspicious start to any activity or occasion. It signified a time when the planetary position is aligned perfectly to bring in good luck and success to any activity commenced. In other words, Indians believe it to be a good omen to carry the next year ahead.

This is also visible during Diwali, especially on Dhanteras. Many traders and investors prefer investing during this auspicious time to benefit from their investments.

But the question remains the same: Is it fruitful to invest in Muhurat Trading? And what if you invest the same amount in Mutual fund SIPs – Which one will yield more success to you?

Worry not, because we will help you clear the confusion.

Through this blog, let us explore the importance of both Muhurat Trading and Mutual FundSIPs. Also, why do people prefer them, and what's the actual reality?

What Is Muhurat Trading?

In the market, Muhurat Trading refers to the time slot where the traders (and investors) can invest in Dhanteras muhurat. Every year, the BSE and NSE exchanges pre-decide this Muhrat 2-3 weeks before the Diwali season (which is yet to begin).

Usually, the market remains closed on public holidays, such as Dhanteras & Diwali. However, adhering to the tradition, this special slot is opened for trading purposes.

In 2025, the Muhurat Trading will take place on 21st October, from 1:45 pm to 2:45 pm. It is typically a one-hour trading session, which varies depending on the date and time (Muhurat). Last year, it was 1st November 2024, from 6 pm to 7 pm.

(Bonus Fact - In 2024, the Sensex ended 335 points higher and the Nifty 50 above 24,300 during Muhurat Trading.)

Understanding The Significance Of Mutual Fund SIPs

When a person invests in a mutual fund at regular intervals but consistently, it is known as a Mutual Fund SIP. The full form of SIP is "Systematic Investment Plan," which allows users to invest at regular intervals. Now, this time gap can be monthly, weekly, or yearly.

But why are SIPs so popular among investors?

It's simple - "Affordability, Consistency, and Compounding."

With SIPs, you don't need to wait to gather a huge corpus before investing. Mutual funds definitely allow a lump-sum investing option, but it is still an option, not a compulsion.

You can start with as little as ₹250 and gradually build wealth through the power of compounding and rupee cost averaging. Over time, these small contributions snowball into a sizeable amount, making funds accessible for everyone.

Comparing Muhurat Trading vs Mutual Fund SIPs

Muhurat trading and mutual fund SIPs have their own respective market timings and investment strategies. While the window for Muhurat trading opens for only an hour, SIPs can be done anytime, irrespective of any auspicious occasion. Moreover, the real comparison depends on the single stock investment during Muhurat trading versus the consistent SIPs made in mutual funds over time.

When you invest in a single stock on Muhurat day, your entire outcome depends on how that one company performs and how the market perceives it in the months or years to come. If the market turns volatile, sector-specific issues arise, or the company underperforms, your returns can be directly hit. The festive optimism during Muhurat trading often pushes people to buy trending or "safe" stocks. Still, the reality is that no stock is immune to market swings.

On the other hand, mutual fund SIPs spread risk across many companies, sectors, and market caps. By contributing a fixed amount regularly over the year, you benefit from rupee-cost averaging (buying more units when the market is low and fewer when it's high. Over time, this cushions your portfolio against short-term volatility and builds wealth steadily.)

Example

Before deciding which one is better: Muhurat Trading vs SIPs, this example will explain why SIPs have a growth pattern and how they can benefit from Muhurat Trading.

On Diwali, during the Muhurat trading session, Ravi decides to go all in. He invests ₹1,20,000 in XYZ shares at the festive high, believing it's the best start for his wealth journey.

For the first few months, the stock does well. But midway through the year, the stock faces a sector slowdown, and its price dips. By the end of the year, Ravi's lump sum is barely above his initial investment—sometimes even lower depending on market swings. His money was tied to the fate of a single company.

On the other hand, Meera chooses a different route.

She invests the same ₹1,20,000, but as ₹10,000 SIPs every month into a diversified mutual fund. This fund also holds XYZ in its portfolio, but not just one stock. It's balanced with banks, FMCG, IT, pharma, and other sectors.

When the stock dipped, Meera's mutual fund remained steady because gains in other companies offset the losses. Additionally, with SIPs, she purchased more units in the months when markets were low, thereby automatically averaging her costs over time. By year-end, her portfolio is comfortably in profit.

However, for Ravi, the case was different – since the stock did witness many ups and downs in this period.

Final Thoughts: Which One Builds Wealth Better Over Time?

The answer lies in the intersection of both approaches. Mutual fund SIPs and Muhurat trading each have their pros and cons. Muhurat trading carries the festive optimism and the excitement of investing in a lucky hour, but it often concentrates risk in a single stock or sector. On the other hand, SIPs are disciplined, diversified, and reduce market timing risk, allowing capital to grow steadily over time.

By starting a SIP on Muhurat day, you combine the best of both worlds - the cultural and psychological benefit of investing during an auspicious period. Also, SIPs bring in long-term advantages of diversification, rupee-cost averaging, and compounding.

So, even if markets dip after Muhurat, your following SIP installments continue to build your portfolio, helping to balance out short-term volatility.

Disclaimer:The information provided in this article is for educational and informational purposes only. Any financial figures, calculations, or projections shared are solely intended to illustrate concepts and should not be construed as investment advice. All scenarios mentioned are hypothetical and are used only for explanatory purposes. The content is based on information obtained from credible and publicly available sources. We do not guarantee the completeness, accuracy, or reliability of the data presented. Any references to the performance of indices, stocks, or financial products are purely illustrative and do not represent actual or future results. Actual investor experience may vary. Investors are advised to carefully read the scheme/product offering information document before making any decisions. Readers are advised to consult with a certified financial advisor before making any investment decisions. Neither the author nor the publishing entity shall be held responsible for any loss or liability arising from the use of this information.