Diwali, or the Festival of Lights, is a five day festival which honors the victory of good over evil, and brightness over darkness. First Day : DHANTERAS or DHANTRAYODASHI. Believing this day to be auspicious, women purchase some gold or silver or at least one or two new utensils. "Lakshmi-Puja" is performed in the evenings when tiny diyas of clay are lighted to drive away the shadows of evil spirits. The SECOND day is called NARAK-CHATURDASHI or CHOTI DIWALI: The story goes that the demon king Narakasur ruler of Pragjyotishpur ( a province to the South of Nepal) after defeating Lord Indra had snatched away the magnificent earrings of Aditi, the Mother Goddess and imprisoned sixteen thousand daughters of the gods and saints in his harem. On the day previous to Narakachaturdashi, Lord Krishna killed the demon and liberated the imprisoned damsels and also recovered those precious earrings of Aditi. As a symbol of that victory Lord Krishna smeared his forehead with the demon
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It is the celebration of Narakasura vadha. Depavali is celeberating because, Lord Krishna and his wife Sathyabhama killed Demon King Narakasura and released 16,000 ladies. Infact, queen Sathyabhama killed Narakasura.