Prayagraj/Mumbai
Mahakumbh has started in Prayagraj. It will run till 26th February. Today, on the first day, lakhs of devotees took bath in the Ganga. But there was a huge decline in the stock market. BSE Sensex fell by 1000 points and Nifty by 500 points during trading. Investors lost Rs 12 lakh crore due to this fall. The historical pattern of the market shows that this time the Sensex may fall during the 45-day long Kumbh. The Sensex has never given positive returns during the Kumbh Melas held in the last two decades.
According to analysis by Samco Securities, the average loss of the Sensex during the last six Kumbh Melas held since 2004 has been 3.42%. During this period there was a decline in the market every time. The highest decline was seen during the Kumbh Mela from 14 July to 28 September 2015. During this Kumbh held in Nashik, Sensex had fallen by 8.29%. Similarly, during the last Kumbh held in Haridwar from April 1 to April 19, 2021, the Sensex had fallen by 4.16% during 18 days. During the Kumbh held in Ujjain from 5 April to 4 May 2004, the Sensex fell by 3.29%.
Why does decline occur?
Hindu traditional belief is that taking a dip at the Triveni Sangam, the confluence of the Ganga, Yamuna and the mythical Saraswati rivers during the Kumbh Mela, washes away sins and helps in attaining salvation. Samko said that Kumbh Mela brings a ray of hope for the Bulls also. When the market moves rapidly the chances of making mistakes increase. People buy and sell shares in the greed for quick profits. Unfortunately participants do not realize their mistakes until there is a market decline. This fall acts like a reset to start afresh, like taking a dip in holy water.
Samko said that there could be many reasons behind this strange behavior of the market during and after Kumbh. The cultural focus and economic shifts during the Kumbh Mela may lead to temporary changes in consumption patterns and reduction in economic activity in some areas. The reason for this is that during this time lakhs of Indians are undertaking pilgrimage. People are full of spirituality and spirit of sacrifice. Such trends may inadvertently influence investor behavior. This may increase risk aversion.
Lesson
The 12-year cycle and alignment of Jupiter during Aquarius reminds us that markets, like human behavior, are often influenced by factors beyond rational economics. The brokerage firm said that investors can take a lesson from this correlation that there is a need to adopt a more cautious strategy when the market falls during the Kumbh Mela.
