Introduction

The ongoing 17th season of the IPL is expected to offer exciting cricket matches and influence the stock market dynamics. The nation’s enthusiasm isn’t restricted to the stadium’s boundaries but extends to the other aspects of the country, such as the economic landscape.

Most people presume a dip in share trading during the IPL season. However, the involvement of various sponsors and stakeholders in the event signals a need to observe movements in the financial market.

Impact of IPL on the Indian stock market - An overview of the historical trends

• 2009

During the second season of the IPL, the Sensex’s performance was bullish, with a remarkable 26% return. However, this impact wasn’t solely because of the IPL. It was also due to political developments like the UPA-II government’s victory.

• 2010

At the time of the 2010 season, the stock market performed poorly due to high inflation rates. However, you cannot overlook the IPL’s impact as it does influence investors’ perceptions and investment decisions. For example, the stocks of the company sponsoring the winning team surged.

• 2015

The market was bullish during the 2015 IPL season, with an approximate rise of 3% in the Bombay Stock Exchange (BSE) Sensex. The bullish trend remained even after the tournament ended, with the index touching an all-time high in May 2015.

• 2016

In 2016, the Sensex’s performance took a different turn, showcasing a bearish trend during the IPL season. There was a decline of about 4% since investors chose to exercise caution in their investment choices.

• 2020

There was a lot of uncertainty in 2020 because of the Covid-19 pandemic. There was no clarity on whether or not the IPL will be played. However, the Board of Control for Cricket in India (BCCI) succeeded in hosting the IPL in the United Arab Emirates (UAE) between September and November.

The year was also challenging for the stock market, with investors avoiding investing their money. During the season’s run, the BSE Sensex index fell by 3%. It was in alignment with the overall market performance influenced by the pandemic’s effect on sectors like retail, hospitality, and travel, which contribute to the Indian economy significantly.

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Top sectors and companies expected to experience the IPL effect

Broadcasters and media companies

• TV18 - TV18 has the tournament’s broadcasting rights, so it will bring the viewers live action from the matches. The television company is a subsidiary of Network18 and will attract a large audience. Consequently, it will also garner higher advertising revenue and increased profitability.
• Network18 - Network18, as IPL’s streaming partner, will encash the steep rise in viewership. Its advertising revenue will rise, resulting in a better share market performance.

Beverage companies

• Varun Beverages - The stock price for Varun Beverages is anticipated to rise as its product’s demand, especially for beverages like Pepsi, increases. There will also be higher advertisement visibility.

Consumer staples companies

• ITC - ITC’s branding opportunities can rise because of its brand Sunfeast’s partnership with Royal Challengers Bangalore. The consumption of its snacking brands during IPL matches will further enhance the company’s visibility and stock performance.
• HUL - HUL’s portfolio encompasses popular tea and coffee brands. Their consumption will increase during IPL matches, leading to better stock performance.

Hospitality and tourism companies

• Indian Hotels - The IPL matches are organised across different Indian cities. Viewers will make hotel bookings as they travel to these cities to watch the matches. This spike in bookings at Indian Hotels, with its reputed properties spread across the country, is expected to lead to a surge in stock performance.
• EaseMyTrip - The platform allows users to book flights, buses, and hotels. As more people travel to watch matches, Easy My Trip will see higher profits and a subsequent increase in share prices. ​​​​​​​

Conclusion

IPL and the stock market have a nuanced relationship. According to historical trends, the tournament does impact market performance, but other factors also have a role to play. Sectors like broadcasting and media, beverages, consumer staples, and hospitality and tourism can witness a positive stock performance due to increased demand.

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