Financial Astrology and Behavioral Bias: Evidence from India

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.