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Impact of festive season on trading

Stock market trading is driven by only two factors fear and greed. Trading is a pure speculation of the price in a very short span of time. One has to be a master in this art and should follow strict rules to remain profitable. India is a country of festivals, almost every month there is some festival being celebrated in some part of the country. But there are several festival which is celebrated in larger part of the country like Holi, Diwali, and Durga puja. All these seasons sees a drop in numbers of retail traders.
Indian market is largely driven by FIIs and one of the major festival for them is Christmas clubbed with New Year celebration. So around this time market liquidity gets reduced and volatility in market also sees a drop. One thing which can not be ruled out is that before the starting of every festive season we can expect a profit booking   approach from Institutional investors as well as from retail investors. There is a cycle which is repeated on yearly basis and buying and selling definitely gets impacted by festive season.
Budget which is not a traditional festival which is celebrated but for market it is a great event and we categorize budget also as a festival for market. Market had always reacted on either side after this event. A tendency of buying before budget is very common in investors so a surge in volume and liquidity can be viewed before this event.
For any retail traders liquidity and volume is not of a great concern because they are not trading is such quantity which require huge volume and liquidity in the market. So it is not a wise decision to stop doing trading around festivals and again restart after that. But we Indians are very much traditional about everything and festivals are of great value for everyone in this country. Several mythological view is also attached with trading as we do Muhurat trading on Diwali which replicates that we are starting something new after remembering goddess Laxmi.

Festivals has their own importance and trading has it’s own but it goes hand in hand with retail investors.

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