Light a Lamp and Look at the Stock Market

Abstract

This paper investigates the impact of the light a lamp event that happened in India during the Great Lockdown due to COVID-19. The event happened across the country and millions of people participated in it. We link the event with the stock market via investor sentiment and misattribution bias. We find a 9% hike in the market return in the post-event day. The effect is heterogeneous in terms of beta, downside risk, volatility, financial distress. We also find an increase (decrease) in long-term bond yields (price), together suggest that market participants demand risky assets in the post-event day.

Keywords: Event effect; Investor sentiment; Stock market; Behavioral finance; Lockdown; COVID-19

JEL Classification: G02; G12