The impact of sporting events on stock prices have already been captured in the past with the stock prices reacting sharply to team performances
Cricket is considered a religion in the Indian sub-continent and people are crazy about the game.
With the ICC Cricket World Cup 2019 being played in England and Wales, the game has already reached far and wide. If you are a trader and a cricket fan who is closely following the Cricket World Cup matches, then there is something interesting in the correlation between this mega sporting event and the stock markets.
The impact of sporting events on stock prices have already been captured in the past, with stock prices reacting sharply to team performances. And when it comes to an event like the Cricket World Cup, there is something that each trader must learn from the game. Through this article we would like to highlight a few similarities between this two!
In the semi-finals, India lost to New Zealand with a small margin of 18 runs, and it is very disheartening to see your country being out of the tournament after consistently playing such a good game. The same goes with trading in the Indian stock market. If you are having a losing day in the markets, you feel disheartened. Therefore, it is best to be detached as traders. You as a trader should not be emotionally attached to specific stocks and should consider wins and losses as a part of life. Let go and move on to the next day with the same belief that today, “I will make profits.”
Ex-skipper and ace batsman Mahendra Singh Dhoni is often seen as the saviour in a tough match. Surprising though, against New Zealand he got run out by Martin Guptil after 50 runs when India just needed 25 runs more in 10 balls. It is wise to ensure that your portfolio is diverse and does not just comprise of a bunch of blue chips and large-caps. Mid-caps and small-caps too can score runs for you when the market gets tough.
In a tough situation like the match on July 9 and 10, you should remain calm and not build pressure as performance deteriorates in high pressure situations. After Rohit Sharma’s wicket, the pressure was on the Indian batsmen to play well, but due to the built-up in pressure, India lost back-to-back wickets instead of playing calmly.
The challenge is to stay cool in order to handle pressure in the moment, so that you can succeed in the future. Similarly, if you are under pressure to make money, you will make losses and at the end of the day will be unsuccessful because pressure impacts one's capability to think independently with an unbiased view. So be focused, make informed decisions and be up-to-date with market developments in order to succeed.
Learn from the experts
Rohit Sharma’s uppercut sixer off Hasan Ali’s ball reminded us of Tendulkar’s swing in the 2003 Cricket World Cup. You may be proficient at your trading strategy, but some inspiration from experts could add to your wisdom and of course wealth. When the market is volatile, following a financial expert’s advice may give you an edge over the others.
To conclude, it is important to reiterate the fact that even though cricket and trading are two different things, you require the same qualities seen in professional cricketer such as being detached, diversified, calm and a having a learning mindset in order to be successful in trading at the Indian stock markets.
(The author is Head of Research at Samco Securities.)Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .