Abstract

In this study, we investigate the impact of the light-a-lamp event that occurred in India during the COVID-19 lockdown. This event happened across the country, and millions of people participated in it. We link this event to the stock market through investor sentiment and misattribution bias. We find a 9% hike in the market return on the post-event day. The effect is heterogeneous in terms of beta, downside risk, volatility, and financial distress. We also find an increase (decrease) in long-term bond yields (price), which together suggests that market participants demanded risky assets in the post-event day.

Highlights

  • The Coronavirus (COVID-19) outbreak in China at the end of 2019 spread around the globe and infected millions of people

  • The event and stock market reaction We first examine the impact of the light-a-lamp event on the stock market

  • This study investigates the impact of the light-a-lamp event in India that was held during the COVID-19 lockdown

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Summary

Introduction

The Coronavirus (COVID-19) outbreak in China at the end of 2019 spread around the globe and infected millions of people. The World Health Organization (WHO) declared COVID-19 a pandemic on March 11, 2020, and several countries opted for nationwide lockdowns. Economic activities were adversely affected, and major stock markets indices plunged (IMF 2020; Zhang et al 2020; Phan and Narayan 2020). The case of India was not different; the government declared a lockdown and imposed social distancing and isolation measures. On the one hand, economic growth projection fell to 1.9%, and the stock market was drastically affected (IMF 2020; Mishra et al 2020). The lockdown affected the mental health of people because of (1) the loss of livelihood or lack of employment, and (2) depressing news on COVID-19.1

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