Dogo Rangsang Research Journal www.drsrjournal.

com
ISSN : 2347-7180 Vol-10 Issue-06 No. 10 June 2020

Impact of Lunar Cycles on Indian Stock Market during COVID – 19

Name of the Authors:
Dr. Namrata Narendra Khatri

Abstract

Introduction –
Indian financial markets are experiencing volatility and uncertainty prevails.
The world stock markets are integrated and are affected by the changes taking
place in any of the stock market. The total market cap lost 27.31% since
January 2020. S & P BSE Sensex which was 42273 points on 20th January,
2020 was 29894 points on 8th April, 2020. As per Indian culture the moon has
a relation with human behaviour. The impact of moon on human behaviour
and their investment decision has been an important aspect. Lunar cycles do
affect the investment decisions of the investors. Lunar cycles are Shukla
Paksha (the bright lunar cycle) and Krishna Paksha (the dark lunar cycle).
The main aim of the study is to examine the impact of full moon and new moon
on the Indian stock market.
Research Methodology – The present study follows a descriptive research
design. The secondary data is considered for the study and the data is
collected for the month of March, April and May15th 2020. This is the period
of Covid -19. The analysis is done using the statistical tool i.e. T-Test.
Major Findings –. The analysis of the data reveals that there is no significant
impact of lunar cycles on the Indian Stock Market during COVID 19 period
March – May, 2020. The analysis further states that the average return of
Sensex for different period shows that the full noon phase are lower than the
new moon phase for all classified period. The returns of the full moon event
day are negative compared to the other periods. The trading volume of full
moon is lower than new moon. Thus, it can be said that the Shukla Paksha and
Krishna Paksha phases of the lunar cycle have a significant impact on the
Indian Stock market.
Managerial Implications – The outcome of study could be considered by
investors and participants in the Indian stock market. It helps to understand
the sentiments of the investketns and their decision making.

Key Words: Shukla Paksha, Krishna Paksha, Indian Stock Market, Returns.

Introduction:
The world markets are integrated and as effect on the other markets. The financial markets in India
are also witnessing sharp volatility due to fallout in global markets. Per COVID 19, market
capitalization on Indian stock exchanges were $2.16 trillion. After COVID -19 the market have shown
uncertainty. The world markets have an impact on BSE Sensex and Nifty 50 which fell by 38%. The
total market cap lost a 27.31% from the beginning of the year. S & P BSE Sensex which was 42273
points on 20th January, 2020 was 29894 points on 8th April, 2020. The stock market witnessed the
volatility due to sentiments of investors due to pandemic. The Indians believe in that Moon has a
P a g e | 54 UGC Care Group I Journal Copyright ⓒ 2020 Authors
Dogo Rangsang Research Journal www.drsrjournal.com
ISSN : 2347-7180 Vol-10 Issue-06 No. 10 June 2020

relation with human thinking and their decision making. Several studies have concluded that there is
connection between Full and New Moons and stock market performance. It is significant to study the
impact of Full and New Moon on the Stock Market.
Literature Review:
Lingaraja Kasilingam (2013) – “Lunar effects and Stock markets”. The main objective of the
researcher was to study the relation between lunar phases and stock market returns. The aim
of researcher is to assess whether there is a lunar influence on stock prices. The researcher
has taken lunar effect as independent of the related anomalies. The researcher concluded that
the new moon day and full moon day do have an impact on stock prices.

S. Sathyanarayanan & N.Sivakumar (2008) – “Lunar Cycles in the Indian Stock Market – A
study of BSE SENSEX”. The main of the researcher was to study the impact of lunar cycles
on the Bombay Stock Exchange. The researcher used the BSE SENSEX data of 17 years to
examine the whether there is significant difference in the stock market activity and
movements around the full moon and new moon. The researcher concluded that the lunar
cycle have a quite limited impact on the Indian stock market.

Kasilingam L.; Justin P.; Murugesan S (2019) – “Indian Culter, lunar phases and stock
market returns”. The researchers aim was to examine the lunar effect on the stock markets
and to test the normality and volatility of daily returns. The researchers selected Five major
sectoral indices from the National Stock Exchange (NSE) to study the relation between lunar
phases and the stock market returns. The researchers used statistical tools like descriptive
statistics, GARCH (1, 1) model and Granger causality. The researchers concluded that the
moon cycle affects individual mood and thinking process and leads to stock market volatility.

Emmanuel O. M., Duncan O. O., & Duncan E. O. (2017) – “The Relationship between Lunar
Cycle and Stock Returns in Companies Listed at Nairobi Securities Exchange”. The aim of
the researcher was to study the association between Lunar cycles and stock return among
companies listed at NSE. The researchers used a sample of NSE 20-Share Index. The
researchers used secondary data from NSE reports between 2010 and 2014. The researchers
used statistical tool like t-test. The researchers concluded that stock returns increases
throughout New Moon (NM) and Full Moon (FM) phases compared to the normal trading
days of the LC. The researchers further concluded that cumulative stock returns are higher
during the NM dates. The researchers concluded that there exists significant difference

P a g e | 55 UGC Care Group I Journal Copyright ⓒ 2020 Authors

Dogo Rangsang Research Journal www.drsrjournal.com
ISSN : 2347-7180 Vol-10 Issue-06 No. 10 June 2020

among mean value of stock returns during NM/FM phases compared to the mean return
during normal trading days.

Research Methodology:
Problem Statement:
Impact of Lunar Cycles on Indian Stock Market during COVID - 19

Research objectives:
 To study the effect of Lunar cycles on Indian Stock Markets
 To study the impact of Full Moon and New Moon of Lunar Cycle on the Indian Stock
Market

Variables Under Study:

 Average Return
 Volume Traded

Research design
A research design is an overall framework that indicates what information to be collected
from which sources and by which procedures. The present study is descriptive research.

Data Collection Plan:

The data for the study is secondary. The study uses the BSE Sensex data of 2.5 months
(March, April and May) of 2020.

Data Analysis:
The analysis of the data is done using inferential statistics. The data is analysis using
statistical tool like t-Test.

Scope and Benefits of the study:

 The study will help the investors to make decision regarding their investments.
 The study will be helpful to the brokers who can give better service to their investors.

Data Analysis:
Ho: There is no significant impact of Full Moon and New Moon of Lunar Cycle on the Indian
Stock Market.

P a g e | 56 UGC Care Group I Journal Copyright ⓒ 2020 Authors

Dogo Rangsang Research Journal www.drsrjournal.com
ISSN : 2347-7180 Vol-10 Issue-06 No. 10 June 2020

H1: There is significant impact of Full Moon and New Moon of Lunar Cycle on the Indian
Stock Market.
Table 1:
Days Critical T-Ratio
Full Moon New Moon
Event day (0) -0.428174011 -0.428174011
1 0.992777006 0.456051
2 0.309755215 0.989031
3 -2.376050274 -0.23062
4 0.827336843 0.176542
5 -0.071657343 0.140 548

The table 1 indicates that day 0 is an event day and day -1 is after one day of particular event.
Days 2. 3, 4 and 5 is the day after particular Full Moon and New Moon day.

“T-tab= -1.96 to +1.96

T-Calculate of full moon on 3rd day = -2.376050274
T-tab < T-Calculate”
On the day of 3rd critical t- ratio of Full moon exceed -1.96. critical ratio of Fool Moon on
3rd day of after particular event is -2.3760. which means T-tab < T-Calculate. And therefore,
we reject NULL hypothesis.

Average Return in different periods:

Table 2:
Total Number of 46 (2nd, March, 2020 To 12th, May, 2020)
Observation
Total event day 3 day (Full Moon Day) 2 day (New Moon Day)

Average Return in different

Periods
Period Full Moon Phase New Moon Phase
Event Day -0.0222 0.0208
One Week -0.0041 -0.0012
Window
Two Week -0.0084 0.0019
Window

The table 2 indicates that returns during the Full Moon Phase are lower than the New Moon
Phase for all periods. The returns for the Full Moon event day are negative compared to other
periods.
Trading Volume of Sensex (in thousand) During Different Period:

P a g e | 57 UGC Care Group I Journal Copyright ⓒ 2020 Authors

Dogo Rangsang Research Journal www.drsrjournal.com
ISSN : 2347-7180 Vol-10 Issue-06 No. 10 June 2020

Table 3:
(in thousands) Event Day 1 Week Window event 2 Week Window
day event day
Full New Full Moon New Full New
Moon Moon W1 Moon Moon Moon
W1 W2 W2
Average Trading 21750k 24550k 22329k 43980k 19788k 32373k
Volume (2nd March
2020 to 12th May 2020)

The Table 3 indicates that the difference between the traded volumes between the different
classification periods. The difference between the mean traded volumes are less statistically
significant on event day. The trading volumes of 1-week window of Full Moon or New Moon
and 2-weeks windows shows more difference. Thus it can be said that the Shukla Paksha
(Full Moon) and Krishna Paksha (New Moon) phases of the lunar cycle do have significant
impact on traded volumes in the Indian Stock Market.

Conclusion:
The analysis of the data indicates that there is few evidence of significant impact of lunar
cycles of the Indian Stock Markets. While calculating critical t- ratio there is only one day’s
(i.e 3rd day after particular event) value exceed to -1.96. Similarly, when calculating average
return of Sensex during different period (i.e FM, NM, FMW1, NMW1, FMW2, NMW2) it
can be stated that full moon phase are lower than that of the new moon phase for all
classification periods. It can further be said that the returns for the full moon event day are
negative compared to other periods. The daily trading volume of Sensex data is classifying
according to different period and it is found that Trading volume of Full moon is lower than
New moon. Therefore, the hypothesis that Shukla Paksha and Krishna Paksha phases of the
lunar cycle have a significant impact on the Indian stock markets.

References:
 Berman Bob (2003). Fooled by the Full Moon - Scientists research for the sober truth
behind some loony ideas, Discover, September 2003, P. 30.
 Kasilingam L.; Justin P.; Murugesan S (2019) – “Indian Culter, lunar phases and
stock market returns” International Journal of Indian Culture and Business
Management, 2019 Vol.19 No.4, pp.394 – 417.
https://www.inderscience.com/info/inarticle.php?artid=104783
 Kathy Yuan, Lu Zheng and Qiaoqiao Zhu “Are Investors Moonstruck? Lunar Phases
and Stock Returns,” J. Empirical Financ., 13(1): 1-23, 2002.
P a g e | 58 UGC Care Group I Journal Copyright ⓒ 2020 Authors
Dogo Rangsang Research Journal www.drsrjournal.com
ISSN : 2347-7180 Vol-10 Issue-06 No. 10 June 2020

 Lingaraja Kasilingam (2013) – “Lunar effects and Stock markets” SMART Journal of
Business Management Studies, Vol.9, Number 2, pp. 88-90.
 M. Selvam (2013) - “Lunar Effect and Stock Market”. SMART Journal of Business
Management Studies, Vol. 9, Number, 2, pp.88-90.
https://www.smartjournalbms.org/journal/vol-9-2/full-
text/Lunar_Effect_and_Stock_Market.pdf
 Muskan K. & Savera J. (2014) – “A Study on effects of astrophysical phases in Indian
Stock Market”. International Journal of Advance Research in Computer Science and
Management Studies.
 S. Sathyanarayanan & N.Sivakumar (2008) – “Lunar Cycles in the Indian Stock
Market – A study of BSE SENSEX”. Paper accepted for the International Conference
on Business and Finance ‘ICBF 2008’, organized by The ICFAI Business School,
Hyderabad and Bentley College, Boston, USA, January 11th and 12th, 2008.
https://www.researchgate.net/publication/338297944_LUNAR_CYCLES_IN_THE_I
NDIAN_STOCK_MARKET_-_A_STUDY_OF_BSE_SENSEX
 http://www.businessworld.in/article/Impact-Of-COVID-19-On-The-Indian-Stock-
Markets/11-05-2020-191755/
 https://www.outlookindia.com/outlookmoney/equity/covid-19-impact-on-stock-
market-4666
 https://www.bloombergquint.com/markets/covid-19-impact-half-of-nifty-50-stocks-
are-trading-at-single-digit-valuations
 https://economictimes.indiatimes.com/markets/stocks/news/coronavirus-its-impact-
on-various-sectors/covid-19-impact/slideshow/74490812.cms
 https://www.thehindu.com/business/markets/covid-19-coronavirus-infects-global-
markets-investors-exit-equities/article30943676.ece
 https://lunatictrader.com/moon-cycles-in-the-markets/

P a g e | 59 UGC Care Group I Journal Copyright ⓒ 2020 Authors