Yeh chand koi diwana hai.......
            koi ashik bara purana hai.......

From yeh chand diwana ...to the melodies of 1950s moon epitomized the love and romance and had been a source of inspiration for lyrists and writers. Not only in India but also across the world. ("Moonlight turns the most civilized man into a primitive."- The day of the Jackal).

But now it appears king and queen of the celestial world the Sun and Moon have been taking interest in the international share market as well. A recent report in The Economist states that David Hirshleifer, of Ohio State University, and Tyler Shumway, of the University of Michigan, after studying the impact of Sun on 26 stock markets across the world spanning a period of 15 years found that on perfectly sunny days the annualized returns averaged 24.8% compared to 8.7% on perfectly cloudy days.

The Economist, referred to another study published by University of Michigan scholars, Kathy Yuan, Lu Zheng and Qiaoqiao Zhu, which had examined the impact of the Moon on stock market returns in 48 countries between 1965 and 2001. As per their findings the average daily returns were higher by nearly 8.3% around new moon as compared to the returns around full moon.

The Economist referred to yet another study by Ilia Dichev and Troy Janes that reported similar inferences on the basis of an analysis of American share prices across 100 years. As per the researchers the daily returns around new moons almost double that around full moons. They reported that stronger lunar effects were evident on stock markets outside America.

So should we absorb and imbibe this American experience in our analysis of the stock markets? And do these pertain to short-term forecasting of share prices?

The answer would be in the negative. The American studies are a product of historical data that certainly highlights the trend but is of little value in short term trend forecasting. The trend seen from such studies are not quite pertinent to short-term projections for there is a risk of a reversal of the predictions happening under the impact of external factors like natural calamities etc. Furthermore the researchers themselves have maintained that - "the results are not a product of data-mining alone. Rather they are the latest manifestation of behavioural finance, that shows how psychological patterns explain apparent market inefficiencies."

While the western analyst bases their research on psychological hypothesis that the Moon effects mood - the crux of their behavioural finance, we in India, posses established algorithms on planetary effects, and their influence on life and business. These inferences were drawn from observations made by Indian scholars across the centuries who correlated astronomical movements with attitudes, behaviour and events.

As per the Vedic system, Sun is the significator of stock exchanges, stock markets, stockbrokers, and workers in stock exchanges. The Moon influences the public opinion, masses and views. Venus again has a significant role in business as it relates to stock exchange, banking, and circulation of currency.

The share price movement is then a cumulative effect of the domestic and global events shaped by Sun, Moon, Venus and Mercury.

Surya Sidhanta is one of the oldest works on planetary movements on this subject, which provides us the basic astronomical time frame. In India all almanacs, ephemeris or Panchang are prepared on the basis of these Sidhanta. The annual ephemeris called Panchang is available all over the country and in a separate section there is complete information on as to how the shares, bullion and commodities will behave during the next 12 months.

As such when the calculations are done on the basis of angles formed on earth by the relative positions of Sun, Moon, Venus and Mercury within the celestial sphere, they take into account the net effect of events influenced by the planetary proximity or distance.

There are primarily 33 equations available that indicate the likely changes in prices in the share prices. Of this 17 indicate an upward movement of share prices and the remaining indicate the downtrend.

While the slow moving planets like Saturn Pluto, Neptune, Uranus and Jupiter define the general long-term trend; the faster moving planets like Mercury and Venus describe the short-term impact. The volatile behaviour of the market is studied from the movement of Moon and Mercury.

Empirically tested over centuries, these combinations provide a definite clue to the future events in stocks, shares and bullions market.

The current year's ephemeris (which is published about 3 months before the beginning of the year) shows some interesting facts:

The above period was deliberately chosen as that period was considered inauspicious, and thus like previous years no up-trend in gold prices was expected.

However the WTC crash on September 11, proved the forecast true forcing the market not to follow the expected price trend during the inauspicious 'sharaad' period.

As such unless the role of other celestial players like Venus and Mercury is taken into account any study on stock market will remain incomplete and it will only be prudent to let the Moon continue to inspire the lyrists and help man romance. After all research too, has established the absence of players from the stock market around full moon. No prizes for guessing where they go!

As published in FE Newsline (of The Financial Express) issue dated 29th November 2001