From Holy Dips to Market Dips: Analysing the Relationship Between the Kumbh Mela and SENSEX

Abstract

The following study attempts to find and establish, a relation between the commencement of the Kumbh Mela and the sentiments in the Indian Capital Market. This relation takes into consideration, the fluctuations experienced by the  Standard and Poor (S&P) Bombay Stock Exchange (BSE) SENSEX from the year, 2010 to 2025.

A thorough analysis of SENSEX required a comprehensive deep- dive into the same, which was achieved by studying the investment patterns exhibited by not only, the Foreign and Domestic Institutional Investors (FII/DIIs), but also Gold Exchange Traded Funds (ETF’s). A correlational study was undertaken, identifying SENSEX as the constant variable, while Gold ETF’s and FII/DIIs were recognized as the dependent variables.

In order to provide a solid foundation for this correlational study, the use of Descriptive Statistics was imperative. The study revealed that, the Market sentiments were bearish during the period of the Kumbh Mela. Investors often opted for ‘safe’ assets, one of them being Gold ETF’s, especially when the SENSEX was plummeting. This was done to ensure that their capital remained safe. However, there have been instances when the investors being overly optimistic, continued investing in the Markets despite the obvious negative sentiments.

An inverse relationship between Gold ETF’s and SENSEX was quite evident, courtesy of the study. The correlational study between FII/DIIs and the SENSEX during the Kumbh period however, reaped interesting observations. Although, the over- arching results supported similar conclusions as the Gold ETF’s study, there were situations when the correlational figures turned out to be positive, albeit a rare phenomenon.

These studies explore the psychological and cognitive mindsets of investors and their behaviour when it comes to Financial Markets. They seem to be irrational at times, when it comes to decision- making, and this factor is also attributable to the existence of certain cognitive and behavioural biases. Investors often rely on their intuitions, due to which, investments seem to be misaligned when compared with the Market outlook. Overall, the Kumbh Mela was not the sole factor responsible for the oscillations in the Capital Markets, but it was one of the biggest contributors of the same.