Do Festivals Move the Stock Market?

The festive season of 2025 is in full swing, and so is the stock market. Last week, it was Diwali when the market was all up, but this week, as the markets opened after Diwali, there’s a bit of sluggishness in the market. Observing these market movements, you may ask Do Festivals Move the Stock Market? 

So, let’s try to understand whether festivals impact the stock market or not in this article. If it does, then which sectors are most impacted, and what is the general market sentiment during festivals? 

Festivals and Sentiments

Every festival in India is deeply rooted in sentiments, culture, and emotions. Festivals bring joy and happiness even in the gloomiest times. It fills the homes and the hearts with positivity, and this gets reflected in stock market investments as well. 

During festivals like Holi, Diwali, Navaratri, Christmas, and even New Year, as optimism flows, the market sentiments usually improve even if for a temporary period. This is mostly due to sentiments of investors, which remain positive during the festivals, and that gets reflected in their investment habits. 

If we speak about Diwali, in India, there is even a special trading window that is opened on the auspicious occasion of Diwali, even when the markets remain closed for the entire day, except for that 1 hour. As you may know, this is known as Muhurat trading, which is regarded as an auspicious thing to do to bring good luck to your investment and business. This indicates the connection between festivals and stock market movement in India. 

During this period, people buy stocks to bring good luck; usually, the market moves up, even if for a brief period. 

If you look at the historical price data, then Sensex and Nifty 50 have mostly closed on a positive note during Muhurat Trading sessions. 

Retail Investment & Spending Plays a Pivotal Role

In India, festivals mean spending, and the most spending comes from the retail and; similarly, the markets also go up due to retail investments mostly during these festive seasons. So, here’s how it happens. 

During festivals, especially the biggest one, either Navaratri or Diwali, or even during Christmas, people often get a bonus from their employers and gifts from family and friends, which is often cash or a quick online transfer. So, the bank account gets credited in most cases during the festive season. So, there is a surplus fund that has suddenly appeared in their account, which they can invest in the stock market. And this is one reason why stock markets move up during the festivals. 

Another way the market moves during the festivals is due to retail spending, which increases multifold during festivals. While we will discuss in detail the sectors that are most impacted by festivals, an overall positive sentiment runs through the markets during festivals due to increased spending. Now increase in retail spending means they are buying goods and services, which will boost the businesses, and thus it gets reflected in the stock market investments as well. 

This leads us to exploring the sectors that are mostly impacted due to festive spending. 

Festivals and Sectoral Movement 

Historically speaking, there are certain sectors where the festival’s impact on the market is highly felt. These include – 

• FMCG and Consumer Goods: During festivals, people buy a lot of consumer durables and FMCG products. From electronics to groceries, everything in the sphere witnesses a significant rise in sales. This, of course, gets reflected in the investments as well as investors expect these festive sales to boost the overall business of the companies in this sector. 
• Automobiles: Diwali and Automobile sales have some real connection. Often, you will see auto companies coming up with their new launches during these festivals, and even some offer discounts to attract more customers. Automobile sales generally pick up during festive and this in turn impacts the automobile sector in general. Another major reason for automobile sales to pick up during this festive season is the upcoming wedding season that starts right from November onwards. 
• Tourism and Hospitality Sector: With the growing interest in traveling, as during the festivals, there are multiple holidays, people tend to plan long vacations, which eventually boost the tourism and hospitality sectors. The hotels and airfares go up drastically during the festivals. Apart from tourism, often during these festivals, people travel to and from their hometown town which also skyrockets the prices. 
• Textiles: In India, festivals mean new apparel, and thus the textile industry needs a special mention when we are talking about sectors that are positively impacted by festivals. 

Is the impact of the festival on the share market Temporary?

So, while it is quite evident that there is an impact of festivals on the share market and festivals do move the stock market, the move is quite short-lived and temporary. The reason is temporary hype in spending activities and money flows. 

In the long run, stock markets are impacted by global and domestic macroeconomic trends, interest rate policies, monetary policies, corporate earnings, and most importantly, the overall demand and supply factors. 

While festivals bring extra cash and increase spending, that’s short-lived, as is the market movement that happens during the festivals. 

Having said that, festivals are a great time to initiate your investment journey or boost your investments with the extra money you have in your account.  

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.