The Relationship between Lunar Cycle and Stock Returns in Companies Listed at Nairobi Securities Exchange

Munyasia EO, Ouma DO, Ochieng DE. "The Relationship between Lunar Cycle and Stock Returns in Companies Listed at Nairobi Securities Exchange." Research Journal of Finance and Accounting. 2017;8(20):95-103.


The belief that Lunar Cycle (LC) affects people’s mood and behavior stems from ancient lore. Various
psychological studies and behavioral business literature provide proof about effect of mood on the benefit prices.
Despite the effects of LC on people’s moods by international researchers, there has been no known study that
focuses on the impact of LC on stock returns at Nairobi Securities Exchange (NSE). The purpose of this research
is to examine the association between LC and stock return among companies listed at NSE. This study adopts
descriptive research design and a sample of NSE 20-Share Index to meet the objective of the study. Secondary
data collected from NSE reports between 2010 and 2014 is analyzed using event study model and numerical
Package for the societal discipline evocative data and statistical association, and the significance of the findings
tested using t-statistic at 95% significance level. This study finds that stock returns increases throughout New
Moon (NM) and Full Moon (FM) phases compared to the normal trading days of the LC. Further analysis finds
that cumulative stock returns are higher during the NM dates. The p–value of -2.72 and -2.404 recorded during
NM and FM phases respectively deviates significantly from the t-significant rate of 1.943 under the degree of
freedom of 6, subjected to testing at 95% significance level. The results show that there exists significant
difference among mean value of stock returns during NM/FM phases compared to the mean return during
normal trading days. This study recommends that capital markets authority (CMA) and NSE comes up with
regulation which will edge lowest and highest price levels through FM and NM phases so that it can secure price
against manipulations and to protect investors against manipulations.
Keywords: Lunar Cycle, Stock Returns, Nairobi Security Exchange

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