The second day of the festival is Narak Chaturdashi or Chhoti Diwali, which falls on the fourteenth day of Ashwin. The legend of Narak, (which typically means Hell in Hindu mythology) Chaturdashi, relates to King Bali who had become so powerful that he was actually proving a threat to the gods.

In order to curb his powers Lord Vishnu appeared in the form of a young Brahmin boy and begged the King to give him some land – which could be covered in three steps and would fulfill all his needs. Known for his philanthropy, the King proudly granted the young boy his wish. It was then, that Lord Vishnu grew to his full height and with his first step covered the heavens. With the second step, he covered the earth and then asked Bali where he could keep his third step. Since Bali as a king could not go back on his word, he offered his own head for the Lord. Thus Vishnu pushed him down to the netherworld. But the Lord allowed Bali to return to earth once a year to light millions of lamps to dispel the darkness that arrogance and pride bring and instead spread the radiance of love and wisdom.

Legend also has it that Lord Yama is also worshipped on Narak Chaturdashi. A big diya is lit at the entrance of every home primarily to honour the God of death and to drive away evil spirits that may beset the home. It is also said that when a Hindu goes to his/her death, it is the light emanating from this diya, which becomes his guiding light to heavens above.

Diwali falls on the fifteenth day of Ashwin – also the Amavaysa (or the moonless or the last night) for that month. Prayers are offered to Lord Ganesha (the son of lord Shiva and Parvati, who is worshipped before any other God in the Hindu pantheon) and Goddess Lakshmi.

The third day is devoted entirely to propitiating the Goddess and is also known as Lakshmi-Puja. She represents good fortune, wealth and beauty. The Hindus invite the goddess to enter their homes and bless them with good health, happiness and good fortune. Diyas are lit to welcome the goddess into the homes and lives of the devout. Even the poor make sure that at least a single diya is lit in their homes so that Lakshmi may bless them.

The Goddess is also welcomed into people's homes is by drawing rangoli (floral designs, made out of real flowers or powdered colours at the foot of the main entrance). A rangoli is a traditional sign of welcome originally drawn only in the shape of a Lotus flower because the Lotus is the seat of the Goddess. In certain parts of the country, rangoli is drawn daily to welcome guests to the house.