Posts Tagged ‘Cricket and stock exchange’

Indian stock market and cricket performance

October 13, 2010

 

The Little Master: image rediff.com

 

Today Indian won the 2nd cricket test against Australia in Bangalore by a handsome 7 wickets. Sachin Tendulkar scored a second innings fifty after his double- century in the first innings which was his 49th Test century.

The Bombay Stock Exchange (Sensex) surged 484 points to 20,688 today.

This was immediately taken as corroboration of the street wisdom that the two are closely tied. The Indian Express is euphoric. Sensex wins on day of India’s triumph.

A superb ending for the stock markets happened in tandem with Team India’s victory against Australia in Bangalore. Coincidence? The 484-point surge in BSE benchmark Sensex today coincided with the triumph of Indian cricket team against Australia –thus corroborating claims of a correlation between trends in stock markets and cricket field.

A recent paper by Monash University economists did find a link between Cricket performance and the BSE Sensex.

Mishra, Vinod & Smyth, Russell, 2010. “An examination of the impact of India’s performance in one-day cricket internationals on the Indian stock market,” Pacific-Basin Finance Journal, Elsevier, vol. 18(3), pages 319-334, June 2010.

This study examines the impact of the Indian cricket team’s performance in one day international cricket matches on returns on the Indian stock market. The main conclusion of the study is that there exists an asymmetric relationship between the performance of the Indian cricket team and stock returns on the Indian stock market. While a win by the Indian cricket team has no statistically significant upward impact on stock market returns, a loss generates a significant downward movement in the stock market. When Sachin Tendulker, India’s most popular cricketer, plays the size of the downward movement in returns is larger.

So in fact the stock market surge today is not quite in line with the paper’s conclusions.

But, for once, a masterly performance by Tendulkar the “Master Blaster” has coincided with an India win!!

So the correlation is permitted some poetic licence.


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