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Correlation between IPL and Indian markets!

Karan Dsij
/ Categories: Trending, Mindshare
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Correlation between IPL and Indian markets!

The countdown has already begun for one of the finest cricketing festivals i.e. India ka tyohaar IPL i.e. Indian Premier League. Literally, it is not less than a festival as it brings together people from different spheres of life together to support their favourite franchise. But then, why are we talking about cricket here? 

Well, we are a cricket-crazy nation and since the cricket festival is coming, I believe that it would be interesting to look at the historical performance of the Indian equity markets, a month before the IPL, during the period of IPL, and also, one-month post IPL. Theodore Roosevelt had once said, "The more you know about the past, the better prepared you are for the future."  

The second leg of IPL will kick off from Sunday i.e., September 19, 2021. So, let’s look at its performance: 

Year  

1 month before   

During IPL  

1 month after  

2008  

10.6  

-5.9  

-13.64  

2009  

17.25  

25.48  

1.31  

2010  

6.04  

3.61  

-7.61  

2011  

5.5  

-6.31  

3.28  

2012  

0.8  

-6.34  

3.28  

2013  

-0.45  

7.23  

-6.59  

2014  

2.38  

10.29  

4.93  

2015  

-0.49  

-3.95  

-0.11  

2016  

1.82  

6.61  

1.34  

2017  

3.26  

1.87  

2.03  

2018  

2.17  

2.98  

-0.93  

2019  

4.35  

-0.66  

5.7  

2020  

1.05  

9.78  

6.7  

F1 2021  

-1.74  

-1.35  

7.21  

F2 2021  

6.4  

   

   

It’s clear from the above table that IPL has been majorly dominated by the bulls, a month before IPL. However, in the same time period, there have been a couple of instances where we have witnessed a minor dip in the markets. Furthermore, since IPL 2021 Season has been divided into two halves and if we take the average of both 1-month performances before IPL, we would get a positive return.   

In the year 2009, a whopping 27 per cent were generated by the markets one month before the IPL. During the IPL period of 2009, the returns were maximised but this was more to do with the victory of the UPA-II government in the general elections. Also, during the IPL period of the last 11 editions, 7 have fetched positive returns with 2009 and 2014 leading with highest gains while 2009 had to do with UPA-II victory. The year 2014 had more to do with the historic win for Bharatiya Janata Party, which transformed the political landscape of the world’s largest democracy.  

During IPL period, there were six instances where we had seen negative returns with the highest being 6.34 per cent in the year 2012, followed by 6.31 per cent in 2011. The fall in 2012 would be on the back of S&P lowered Indian outlook to ‘negative’ and fall in the global markets, triggered by worries in Spain & Italy.   

A month after the IPL has also been mostly bullish, barring four instances. In 2008, nearly 13.64 per cent fall was witnessed due to Global Financial Crisis. Also, the fall of 6.59 per cent in the year 2013 could be amid worries that capital inflows may dry up if the US Fed sticks to its plan of slowing down monetary stimulus.   

According to you, would the run-up continue despite the Indian markets seeing a good run-up ahead of the second leg of IPL 2021? 

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