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Experts believe that IPL can highly influence the market performance. It is speculated that emotion has an important role to play in influencing investment decisions. Secondly, the feelings involved in cricket events like IPL can be catalytic in pivoting the moods of the investors. Experts discovered that the investment decisions are influenced as much by emotion as it is by justification. IPL has a large audience base and has a strong emotional base.
The data demonstrates that the sponsors of the IPL teams perform better in the market during the IPL season. Winning boosts the moods of the investors and swings their preference towards the winning team sponsor, like in 2009 DCHL stocks rebounded after the DC team won the title. DCHL stocks gained 42 per cent after the victory of Deccan Chargers. Also, you can take the example of Reliance stocks. Reliance stocks performed significantly better when Mumbai Indians won the title in 2013. Previously, Reliance shares were yielding negative returns consecutively for three years. A similar case was observed with India Cement shares, which gained 10 per cent when Chennai Super King.
According to the data analysis, it is observed that the market return coming after a victory is greater than the average mean returns on other days. Contrariwise, market performance slows down following a loss. During the T-20 World Cup, the market recorded a lower loss in the days following India’s win.
Concluding to the factor that sometimes, emotion evolves the definitive factor for investing. Although we can’t exactly substantiate that there exists a strong connection between IPL and the stock market, there certainly is some association between the two.