Sensex and the Kumbh Mela: The index gave negative returns during the last 6 occasions

As uncanny as it may seem, the current slump in the Indian stock market might have a connection to the Kumbh Mela. Historical data reveals that the benchmark Sensex has delivered negative returns during Kumbh periods over the past 20 years.

A study by Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, reveals that the Sensex has delivered a negative return in the last six Kumbh periods.

Kumbh is a major Hindu pilgrimage festival that attracts millions of devotees worldwide. Kumbh is celebrated every three years, rotating between the four sites: Prayagraj (Allahabad), Haridwar, Ujjain, and Nashik.

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However, Mahakumbh occurs once every 12 years at Prayagraj. It is connected with the planet Jupiter, which takes approximately 12 years to complete one revolution around the Sun. The Mahakumbh occurs when Jupiter enters specific zodiac signs and aligns with the Sun and Moon in particular celestial configurations.

This year, the Mahakumbh Mela started on January 13 and will conclude on February 26, 2025.

Sensex and the Kumbh Mela

In 2004, the Sensex fell 3.27 per cent during the Kumbh Mela period. On the next two occasions, in 2010 and 2013, the benchmark index lost over a 1 per cent.

In 2015, the index suffered a loss of over 8 per cent, the biggest loss in percentage terms during the Kumbh period in the last 20 years.

During 2016 Kumbh, the Sensex dropped over 2 per cent and during 2021 Kumbh, the index fell over 4 per cent.

Take a look at this chart

During the Kumbh Mela, devotees take a dip in sacred rivers, believing it will cleanse them of their sins. Similarly, the stock market appears to undergo a correction during this period, perhaps as a way of "atoning" for the excesses of neglecting valuations and fundamental factors during bullish phases.

"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," said Sheth in his report.

While there are many factors at play behind the ongoing rout in the Indian stock market, Sheth pointed out that cultural focus and economic shifts during the Kumbh Mela 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," said Sheth.

"Jupiter’s 12-year cycle and its alignment with the Mela remind us that markets, like human behaviour, are often influenced by factors beyond rational economics. Investors might draw lessons from this correlation, considering the historical underperformance as a signal to adopt a more cautious strategy during Kumbh Mela. Whether this phenomenon is driven by celestial mechanics, cultural dynamics, or economic patterns, it serves as a reminder that markets are intricately tied to human beliefs, behaviours, and even the cosmos," Sheth said.

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