Skip to main content
SpringerLink
Log in

Financial Astrology and Behavioral Bias: Evidence from India

  • Original Research
  • Published:
Asia-Pacific Financial Markets Aims and scope Submit manuscript

Abstract

Purpose of the study is to analyse the retrograde effect of mercury on Indian stock indices, i.e., Nifty50 and BSE Sensex. This paper presents and probes, whether the usually described phenomenon of the retrogratory effect of planets in Indian astrology persists in Indian stock indices. This research utilizes secondary data retrieved from Bloomberg from 1998 through 2018 of Nifty50 and BSE Sensex on a daily closing basis. Further, the study employs EGARCH (1,1) models to inspect the leverage effect in the market returns and the impact of the retrogratory movement of mercury on market returns. The interdisciplinary studies relating to Indian astrological concepts and financial trading strategy are very scant, wherefore, this study helps to unearth an anomaly-based trading strategy for the individual and institutional investors in the capital market. The study culminates that Indian stock indices observe the presence of asymmetry or the leverage effect during the retrogratory movement of Mercury, and a positive impact of Mercury retrograde movement on market returns. The scope of the study is limited to major stock indices of India and considers only the retrogratory movement of mercury to trace the evidence of behavioral bias in the financial market. This paper furnishes a unique empirical approach to investigate the influence of cultural variable on behavioral bias in Indian stock indices under the influence of the retrograde movement of mercury inciting asymmetric information and market anomaly.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

References

  • Alt, R., Fortin, I., & Weinberger, S. (2011). The Monday effect revisited: An alternative testing approach. Journal of Empirical Finance. Elsevier B.V., 18(3), 447–460. https://doi.org/10.1016/j.jempfin.2011.04.002.

    Article  Google Scholar 

  • Basham, A. (1982). The wonder that was India (3rd ed.). London: Sidwick & Jackson.

    Google Scholar 

  • Bikhchandani, S., Hirshleifer, D., & Welch, I. (1998). Learning from the behavior of others: Conformity, fads, and informational cascades. Journal of Economic Perspectives, 12(3), 151–170. https://doi.org/10.1257/jep.12.3.151.

    Article  Google Scholar 

  • Bollerslev, T. (1986). Generalized autoregressive conditional heteroskedasticity. Journal of Econometrics. https://doi.org/10.1109/TNN.2007.902962.

    Article  Google Scholar 

  • Bonner, W., & Rajiva, L. (2007). Mobs, messiahs, and markets: Surviving the public spectacle in finance and politics. New York: Wiley.2

    Google Scholar 

  • Box, G. E. P. (1976). Science and statistics. Journal of the American Statistical Association, 71(356), 791–799. https://doi.org/10.1080/01621459.1976.10480949.

    Article  Google Scholar 

  • Boyd, R., & Richerson, P. J. (1985). Culture and the evolutionary process, culture and the evolutionary process. Chicago, IL: University of Chicago Press.

    Google Scholar 

  • Caparrelli, F., D’Arcangelis, A. M., & Cassuto, A. (2004). Herding in the Italian stock market: A case of behavioral finance. Journal of Behavioral Finance, 5(4), 222–230. https://doi.org/10.1207/s15427579jpfm0504_5.

    Article  Google Scholar 

  • Chui, A. C. W., & Titman, S. (2004). Individualism and momentum around the world*. Science And Technology, 65(852), 361–392.

    Google Scholar 

  • De Bondt, W. F. M., & Thaler, R. (1985). Does the stock market overreact? The Journal of Finance, 40(3), 793–805. https://doi.org/10.1111/j.1540-6261.1985.tb05004.x.

    Article  Google Scholar 

  • De Bondt, W. F. M., & Thaler, R. (1994) Financial decision-making in markets and firms: A behavioral perspective. National Bureau of Economic Research, Working Paper No. 4777.

  • Dean, G., & Kelly, I. W. (2003) Is astrology relevant to consciousness and psi?, Journal of Consciousness Studies, 10(6/7), p. 175. https://login.libproxy.uncg.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=10879586&site=ehost-live.

  • Dichev, I. D., & Janes, T. D. (2001). Lunar cycle effects in stock returns. Ssrn. https://doi.org/10.2139/ssrn.281665.

    Article  Google Scholar 

  • Dichev, I. D., & Janes, T. D. (2003). Lunar cycle effects in stock returns. Journal of Private Equity, 6(4), 8–29.

    Article  Google Scholar 

  • Dowling, M., Dowling, M., & Lucey, B. M. (2008). Robust global mood influences in equity pricing. Journal of Multinational Financial Management, 18(2), 145–164. https://doi.org/10.1016/j.mulfin.2007.06.002.

    Article  Google Scholar 

  • Eichengreen, B., & Ricardo, H. (1999) Exchange rates and financial fragility, political science.

  • Engle, R. F. (2018). Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation Author ( s ): Robert F. Engle Published by : The Econometric Society Stable URL : https://www.jstor.org/stable/1912773 REFERENCES Linked references a. Econometrica Journal of the Econometric Society, 50(4), 987–1007.

    Article  Google Scholar 

  • Ertel, S. (1992). Update on the “Mars Effect”. Skeptical Inquirer, 16(1), 150–160.

    Google Scholar 

  • Evans, D. A. (2006). Subject perceptions of confidence and predictive validity in financial information cues. Journal of Behavioral Finance, 7(1), 12–28. https://doi.org/10.1207/s15427579jpfm0701.

    Article  Google Scholar 

  • Floros, C., & Tan, Y. (2013). Journal of emerging market. Journal of Emerging Market Finance, 12(1), 107–127. https://doi.org/10.1177/0972652712473405.

    Article  Google Scholar 

  • Garling, T., Kirchler, E., Lewis, A., & Raaij, F. V. (2009). Psychology, financial decision making, and financial crises. Psychological Science in the Public Interest, 10(1), 1–47. https://doi.org/10.1177/1529100610378437.

    Article  Google Scholar 

  • Gauquelin, M. (1969). The scientific basis of astrology. New York: Stein and Day. https://catalog.hathitrust.org/api/volumes/oclc/2186.html.

  • Gauquelin, M., Gauquelin, F., & Eysenck, S. B. G. (1979). Personality and position of the planets at birth: An empirical study. British Journal of Social and Clinical Psychology, 18(1), 71–75. https://doi.org/10.1111/j.2044-8260.1979.tb00306.x.

    Article  Google Scholar 

  • Grief, A. (2002). ‘Cultural beliefs and the organisation of society: A historical and theoretical reflection on collectivist and individual societies. Journal of Political Economy, p Inside Back Cov-Inside Back Cov. https://doi.org/10.1086/670054.

    Article  Google Scholar 

  • Grinblatt, B. M., Titman, S., & Wermers, R. (2017). American economic association momentum investment strategies, portfolio performance, and herding : A study of mutual fund behavior author (s): Mark Grinblatt, Sheridan Titman and Russ Wermers Source. The American Economic Review, 85(5), 1088–1105. https://doi.org/10.1093/icvts/ivx119.

    Article  Google Scholar 

  • Himes Jr., J. S. (1950). Human society. By Kingsley Davis. New York: The Macmillan Company, 1949. 665 pp. and Modern American Society. By Kingsley Davis, Harry C. Bredemeier, and Marion J. Levy Jr. New York. Rinehart and Company, 1948. 779 pp.; 1949, 734 pp. Social Forces, 29(1), pp. 100–101. doi: 10.2307/2572775.

  • Jenny, C., & David, V. (1998). The Asian Crisis: Competing Explanations, SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 1998–12, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.

  • Johnsson, M., Lindblom, H., & Platan, P. (2002) Behavioral finance - and the change of investor behavior during and after the speculative bubble at the end of 1990s’. School Of Economics and Management, January, pp. 1–87.

  • Kozlova, E. (2011). A phenomenological inquiry into the process and effects of finding meaning with astrological symbolism by Elena Kozlova A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Transpersonal Psychology. Palo Alto: Institute of Transpersonal Psychology.

    Google Scholar 

  • Mayer, M. (1977). A holistic perspective on meaning and identity: Astrological metaphor as a language of personality in psychotherapy. Unpublished doctoral dissertation, Saybrook Graduate School and Research Center, San Francisco, California.

  • McWhirter, L. (1977). Astrology and stock market forecasting (2nd ed.). New York City: ASI Publishers Inc.

    Google Scholar 

  • Murgea, A. (2016). Mercury retrograde effect in capital markets: Truth or Illusion? Timisoara Journal of Economics and Business, 9(1), 49–61. https://doi.org/10.1515/tjeb-2016-0004.

    Article  Google Scholar 

  • Nelson, D. B. (2016) ‘Conditional heteroskedasticity in asset returns : A new approach author (s): Daniel B. Nelson Published by : The Econometric Society Stable URL : https://www.jstor.org/stable/2938260 Accessed : 17–04–2016 19 : 29 UTC Your use of the JSTOR archive indica’, Econometrica: Journal of the Econometric Society, 59(2), pp. 347–370.

  • Nofsinger, J. R., & Sias, R. W. (1999) ‘{https://www.afajof.org/journal/abstract.asp?ref=0022-1082&vid=54&iid=6&aid=188&s=-9999Herding} and Feedback Trading by Institutional and Individual Investors’, The Journal of Finance, 54(6), pp. 2263–2295.

  • Olsen, R. A. (1998) Behavioral finance and its implication for stock-price volatility. Financial Analysts Journal, pp. 10–17. doi: 10.2307/4480062.

  • Oreste, F. (2012). Quantum trading: Using principles from W.D. Gann and modern physics to forecast financial markets. Hoboken, NJ: Wiley.

    Book  Google Scholar 

  • Ritter, J. R. (2003). Behavioral finance. Pacific-Basin Finance Journal, 11(4), 429–437.

    Article  Google Scholar 

  • Ronald, E. H. (1974). Biorythms and their effect on physical performance. La Crosse: University of Wisconsin.

    Google Scholar 

  • Sharma, S. (1999) The challenge of predicting economic crises. Finance & Development, 36(2), p. 40. https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=2048292&site=ehost-live.

  • Skinner, H. C. (2016). Exploring the financial universe: The role of the sun and planets in the world of finance. FL: IBIS Press.Lake Worth,

    Google Scholar 

  • Stulz, R. M., & Williamson, R. (2003). Culture, openness, and finance. Journal of Financial Economics, 70(3), 313–349. https://doi.org/10.1016/S0304-405X(03)00173-9.

    Article  Google Scholar 

  • Thach, N. N., & Diep, V. N. (2018). The impact of supermoon on stock market returns in Vietnam. Studies in Computational Intelligence, 760, 611–623.

    Google Scholar 

  • Tversky, A., & Kahneman, D. (1986). The framing of decisions and the evaluation of prospects. Studies in Logic and the Foundations of Mathematics, 114(1), 503–520. https://doi.org/10.1016/S0049-237X(09)70710-4.

    Article  Google Scholar 

  • Wermers, R. (1999). Mutual fund herding and the impact on stock prices. Journal of Finance, 54(2), 581–622. https://doi.org/10.1111/0022-1082.00118.

    Article  Google Scholar 

  • Williams, D. (1984). Financial astrology. Washington, DC: American Federation of Astr.

    Google Scholar 

  • Yuan, K., Zheng, L., & Zhu, Q. (2006). Are investors moonstruck? Lunar phases and stock returns. Journal of Empirical Finance, 13(1), 1–23. https://doi.org/10.1016/j.jempfin.2005.06.001.

    Article  Google Scholar 

  • Zelen, M. (1976). Astrology and statistics: A challenge. Humanist, 36(1), 32.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Banking Technology, School of Management, Pondicherry University, Kalapet, India

    Ashish Mahendra & S. Sudalaimuthu

  2. Finance and Accounting, Indian Institute of Management Nagpur, Nagpur, India

    Shiba Prasad Mohanty

Authors
  1. Ashish Mahendra
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Shiba Prasad Mohanty
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. S. Sudalaimuthu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ashish Mahendra.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Mahendra, A., Mohanty, S.P. & Sudalaimuthu, S. Financial Astrology and Behavioral Bias: Evidence from India. Asia-Pac Financ Markets 28, 3–17 (2021). https://doi.org/10.1007/s10690-020-09310-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10690-020-09310-8

Keywords

Search

Navigation