New Delhi, Nov. 7 -- India's stock markets will open for a special shortened session on Sunday as the country celebrates Diwali, its biggest festival, keeping alive a tradition that has survived the shift from handwritten ledgers and bustling trading floors to smartphones and algorithms.

Known as Muhurat trading, the ceremonial session marks the start of a new Hindu calendar year, called Samvat, for many of India's trading communities. The idea is simple: begin the year with a transaction intended to bring prosperity.

But this year's celebration comes against a mixed market backdrop. While a recent rebound has turned India into a relative bright spot amid the global tech selloff, equity benchmarks are ending Samvat 2082 down more than 3...