Sensex’s Kumbh Connection: Know How The Index Has Performed During The Festival Since 2004

India is gearing up to participate in the Maha Kumbh Mela 2025. It is believed that taking a dip in the holy Ganga on the auspicious occasion of the Kumbh can cleanse one of sins. Hindu devotees head to the city where the Kumbh Mela is being organised and engage in the festival.

While devotees await the onset of the festival, a study has now found that stock market investors too are impacted majorly by the mega event.

Apurva Sheth, head of market perspective and research at Samco Securities shared his analysis on LinkedIn which shows that the Sensex has not given positive returns during the period in which the Kumbh Mela was organised in the last two decades.

The Biggest Dip

Sheth said in his post that the 30-share benchmark index has given average returns of -3.42 per cent in the six Kumbh Melas organised since 2004. The index witnessed the biggest dip in the 76-day period in which the Kumbh Mela was organised in 2015. The Sensex slipped as much as 8.29 per cent between July 14, 2015 and September 28, 2015.

Sensex’s Karmic Cleansing

Sheth also mentioned in his Linkedin post that the returns given by the Sensex six months after the Kumbh Mela have been positive in five out of the six times the festival was organised in the last two decades.

In 2016, the Sensex closed at 25,616.84 after the Kumbh ended. Six months later, the Sensex dipped 2.54 per cent to 24,966.4 on March 28, 2016. However, the average gains six months after the Kumbh are 8 per cent.

The phenomenon of karma is an integral part of Hindu belief. It is believed that good deeds accrue good karma and wrongdoings accrue bad karma or sin, and the sum total of these deeds is the reason behind the events which happen with us. Taking a dip in the holy river is said to undo the wrongdoings and cleanse devotees of their bad karma. Having good karma ultimately helps in attaining moksha or salvation.

In his post, Sheth also spoke about the phenomenon in the context of the Sensex and said that the correction seen in the markets is akin to the benchmark index taking a dip to reset itself and undo the karma accumulated in bull runs when investors hastily sell stocks to accrue profits.

“Fortunately, for bulls, too the Kumbha Mela brings a ray of hope to wash away the karma accumulated in a bull market. There is a high chance of committing mistakes when the market is rising rapidly and participants just want to flip stocks in the lure of quick profits. Unfortunately, participants don’t realise their mistakes till there is a correction or a crash. This correction acts like a reset to start afresh, just like a dip in the holy waters,” Sheth said.

While the phenomenon of the Sensex crashing during the days of the Maha Kumbh may leave investors wondering, there’s no one clear answer for the same.

Sheth wrote in his post that the Kumbh Mela is organised when the planet Jupiter is in a specific alignment with the Sun, and it is believed that this alignment is what bestows cosmic energy to the river to cleanse sins. Thus, the astronomical alignment of the planets can be responsible for the phenomenon.

“Kumbha Mela occurs when Jupiter enters specific zodiac signs and aligns with the Sun and Moon in particular configurations, marking a period of heightened spiritual significance. Hindus believe this alignment imbues the rivers where Kumbh is celebrated with cosmic energy, making it an auspicious time for purification and renewal,” Sheth said.

On the other hand, macroeconomic changes triggered by a mass movement of devotees to attend the Maha Kumbh could be a reason behind the temporary shifts in consumption patterns and lower economic activity in some areas of India. Additionally, such events also affect investor sentiments

“There can be several reasons behind this peculiar market behaviour during and after Kumbh. Cultural focus and economic shifts during Kumbh Mela, where millions of Indians are taking a pilgrimage,

might lead to temporary shifts in consumption patterns and reduced economic activity in certain sectors. Such events are also deeply rooted in renewal and detachment which might unconsciously affect investor behaviour leading to more risk-averse sentiment,” Sheth said.