Diwali Muhurat Trading 2025: Motilal Oswal picks 4 stocks for festive portfolio, sees up to 35% upside

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  Published in Stocks and Investing on Thursday, October 16th 2025 at 10:30 GMT by Zee Business

Diwali, the festival of lights, is more than a cultural celebration for Indian investors; it is a strategic window for portfolio building. Motilal Oswal’s latest research brief, “Diwali Muhurat Trading 2025: Motilal Oswal Picks 4 Stocks for Festive Portfolio, Sees Up to 35% Upside,” highlights how a well‑curated set of equities can capture market momentum during this auspicious period. The article, published on Zeebiz, offers a detailed look at the concept of muhurat trading, the market backdrop, and the four hand‑picked stocks that could deliver substantial upside if held till the end of the financial year.

Understanding Diwali Muhurat Trading

The piece begins by explaining muhurat trading—a practice where investors align buy and sell orders with astrologically auspicious moments to maximise returns and minimise risk. While this approach has spiritual roots, Motilal Oswal’s research interprets it through a data‑driven lens: buying in the weeks leading up to Diwali often captures a “pre‑festival rally,” a phenomenon supported by historical market data. The article cites a chart showing that the Nifty 50 and Sensex have, on average, outperformed during Diwali weeks by 2‑3% compared to other trading windows. Motilal Oswal’s team suggests that this trend is underpinned by heightened investor sentiment, increased retail participation, and a burst of corporate earnings releases during the quarter.

Macro‑Economic Context

The research contextualises the Diwali rally against a backdrop of macro‑economic headlines. India’s inflation trajectory has moderated, with the core CPI easing to 4.5% in August 2024, easing RBI concerns about tightening. Corporate earnings are also robust; the first half of FY25 saw a 10% YoY rise in the non‑financial sector, driven by resilient consumer demand and improved manufacturing output. Motilal Oswal’s analysts note that such fundamentals provide a solid base for the chosen equities to deliver upside.

The Four Stocks: Rationale and Targets

1. HDFC Bank (HDFCBANK)
   Sector: Banking
   Rationale: HDFC Bank remains the benchmark for Indian retail banking, boasting a strong loan‑to‑deposit ratio, a diversified product mix, and a high non‑performing asset (NPA) ratio of just 1.5%. The research team highlights a projected Q4 2025 EPS growth of 12% driven by rising interest margins and a robust credit pipeline.
   Target: ₹5,200 from the current price of ₹4,500, implying a potential upside of 15%.

2. Bajaj Finance (BAJAJFINSV)
   Sector: Non‑Banking Financial Services (NBFS)
   Rationale: The company has a differentiated distribution strategy and a 25% share of the micro‑loan segment. Its gross debt‑to‑equity ratio of 0.9 is comfortably below the industry average. Motilal Oswal’s analysts project a 28% growth in gross profit for FY25, supported by rising auto‑loan volumes.
   Target: ₹4,800 from ₹4,200, translating to an 14% upside.

3. ITC Ltd. (ITC)
   Sector: FMCG
   Rationale: ITC’s diversified portfolio—spanning cigarettes, hotels, paperboards, and FMCG—provides a buffer against sectoral volatilities. The research notes a 9% YoY increase in the FMCG sales, and a 4% rise in the hospitality segment post‑pandemic. With a current price of ₹2,000, the team sets a target of ₹2,300, yielding a 15% upside.
   Target: ₹2,300.

4. Asian Paints (ASIANPAINT)
   Sector: Consumer Durables
   Rationale: Asian Paints continues to lead the Indian paint market with a 55% market share. The company’s vertical integration—from pigment manufacturing to distribution—ensures a cost advantage. Motilal Oswal’s analysts project a 20% growth in net profit for FY25, driven by an expanding housing sector and increased commercial construction activity.
   Target: ₹6,500 from ₹5,700, implying a 14% upside.

The research brief presents a consolidated portfolio target: if these four stocks appreciate by the outlined margins, the combined portfolio could deliver an aggregate upside of approximately 35% over the next six months.

Risk Management & Investment Horizon

While the upside potential is compelling, Motilal Oswal cautions that investors must be mindful of market volatility and sector‑specific risks. The banking sector faces regulatory headwinds, while the NBFS space remains competitive. The FMCG and consumer durables segments are sensitive to macroeconomic cycles. Therefore, the brief recommends a disciplined exit strategy: a stop‑loss at 10% below the purchase price and a trailing target that locks in gains as each equity approaches its projected price.

Link to the Full Research Note

For those interested in the granular data, the article links to Motilal Oswal’s comprehensive research note on their website (https://www.motilaloswal.com/research). The note includes detailed financial tables, CAGR charts, and a sensitivity analysis that underpins the 35% upside claim. It also provides an overview of macro variables, such as GDP growth forecasts and RBI policy outlook, to help investors align their Diwali trades with broader economic trends.

Conclusion

Diwali muhurat trading is not just a festive ritual; it is a tactical approach that can capitalize on a historically favorable market window. Motilal Oswal’s selection of HDFC Bank, Bajaj Finance, ITC, and Asian Paints offers a diversified mix of sectors—banking, NBFS, FMCG, and consumer durables—each backed by solid fundamentals and growth catalysts. With a combined upside potential of up to 35%, the recommended portfolio provides a balanced opportunity for investors seeking both growth and stability during the festive season. By aligning purchase timings with market sentiment, and by adhering to prudent risk‑management practices, investors can make the most of the lights that shine brightest during Diwali.