MERCURY RETROGRADE AND ITS EFFECT ON STOCK MARKET RETURNS : EVIDENCE FROM INDIA & USA

Abstract

Since the beginning of humanity, astrological beliefs have been a significant part of human history, thought, worldviews, language, and other aspects of social culture. The practice of linking the movement of celestial bodies to the events in the financial markets has been a relatively newer concept, however, various researchers have alluded that astrological perceptions are bound to impact the investment decisions and thereby impact the capital markets. Thus, this paper aims at evaluating the impact of one of the most well-known astrological phenomenon, Mercury Retrograde on capital markets. According to astrological tradition, although an optical illusion, Mercury retrograde periods are marked by confusion and miscommunications. There is a long-held view that it is advisable to avoid established plans during Mercury retrograde, signing contracts, starting new initiatives, or opening new stock market positions since the trades could be less effective and the people more likely to make mistakes. The paper presents and probes whether the usually described astrological impacts of retrogratory effects of planets persists in Indian stock indices i.e. NIFTY50 and BSE Sensex & American Stock Indices i.e. NASDAQ & DJIA. This research utilizes the secondary data of daily closing prices from 2013- 2023 retrieved from official websites of NSE and BSE for Indian Stock exchanges and from Yahoo Finance for American stock exchanges. Further, the study employs regression models in order to inspect the impact and the correlation between return and retrograde periods. The proposed model also considers the dynamic character to past returns along with retrograde dummy variables. An attempt has been made to explore the impact of cultural variables on behavioural bias in Indian stock indices under the influence of mercury's retrograde movement, which causes asymmetric information and market oddity. Thus, the finding of the study are concerned with return’s volatility during the planetary movement and investigate the influence of this cultural variable on stock indices.