According to Ramayana, Deepavali commemorates the return of Ram, an incarnation of Lord Vishnu and the eldest son of King Dasharath of Ayodhya, from his 14-year exile with Sita and Lakshman after killing the Ravana, a demon king. The people of Ayodhya illuminated the kingdom with earthen diyas (oil lamps) and fireworks to celebration of the return of their king. Continuing the story of Rama, this festival commemorates Lord Ram's return to his kingdom Ayodhya after completing his 14-year exile. Twinkling oil lamps or diyas light up every home and firework displays are common all across the country. This celebration took place on the night of the new moon of Ashwin (October-November). The tradition and the timing continued to be followed even these days.

The Day of Narakchaturdashi. This is actually the pre- Deepavali day and the beginning of the four day long festival. The day is associated with the legend of the demon Naraka.This holy day marks the vanquishing of the demon Naraka by Lord Krishna and his wife Satyabhama. According to Puranas Naraka, the son of Bhudevi, acquired immense power as a blessing from Lord Brahma after a severe penance. He soon unleashed a reign of terror in the kingdom of Kamarupa, harassing the lestial beings with his invincible might. Unable to bear the tyranny of the demon, the celestial beings pleaded with Lord Krishna to save them from his torture.But Naraka could not be easily killed as he had a boon that he could face death only at the hands of his mother Bhudevi. So, Krishna asks his wife Satyabhama, the reincarnation of Bhudevi, to be his charioteer in the battle with Naraka.When Krishna feigns unconsciousness after being hit by an arrow of Naraka, Satyabhama takes the bow and aims the arrow at Naraka and kills him instantly. Later Lord Krishna reminds her of the boon she had sought as Bhudevi. The slaying of the Naraka by Sathyabhama could also be taken to interpret that parents should not hesitate to punish their children when they stray on to the wrong path.The message of Naraka Chaturdasi is that the good of the society should always prevail over one's own personal bonds. This Narakachaturdashi day is dedicated to lights and prayers heralding a future full of joy and laughter.

The day of Deepavali has special significance for the business community as they consider this day to be the perfect time to begin their new financial year. Some people also indulge in gambling on the day of deepavali because it is a believed that wife of Lord Shiva, Goddess Parvati played dice with Him on this day and therefore those, who gamble on this auspicious day, are blessed with prosperity.