The Calendar Effect

Calendar holidays always cause an effect on overall condition of the stock market. Same situation happens to the Karachi Stock Market. The predefined calendar closures always affect the overall situation and index of the stock market. The holidays due to many different reasons cause a great divergence generally in market index. In general, it has been noticed that almost every nation faces a great calendar effect on its stock market. It has been discovered as according to many of researchers and scholars that the days and months mainly affect the circumstances and the position of the market volume. Since many decades, the researchers are trying hard to get the best trends about the overall market influence. Through many procedures and research work they came to know that normally the calendar’s overall effect has been same through many years. The calendar effects are depicting a same manner since last many years. Much wealthy returns are noted in the month of January. (Thaler 1993) Although we cannot directly link the local market with an international one, but the international situations definitely cause a great impact on Karachi Stock Market.

The Role of Stock Market in an Economy

It is very true that the strength of any country or its economy is greatly depended on that country’s stock market. If the stock market is going good and contributing its share well in the fulfillment of the economy, then a country can proceed towards better economic conditions. Otherwise it’s difficult to improve economy if there will be no business in its stock market. Shiguang (2004) stated that the stock market never causes a direct influence over any community except that a market going through its worst scenario can damage the prosperity and prestige of a nation, which is not beneficial for the nation’s overall economy. It means that the overall condition on index table tells us some very clear economical, financial, and political and many such social conditions, which cause some direct impacts. More over it can be said that the influence in stock market manages the overall condition of the business. The economical values of a country may get worst reputation to closures. As holidays mean no business and no activities mean a lack of investor’s interest.

The Holidays and their Effects

The point of view about holidays vary from researcher to researcher and most of them assumed that only such holidays should be considered which are not weekends as the it has been seen that the economic disaster of Kenya caused a complete closure even the disaster was not considered to be a predefined almanac effect. Moreover, other religious and some cultural holidays also cause a great effect on the stock market (Gallo 2000). Hence the overall calendar effects too much on a stock market.

Past study about US market shows, that holidays affect the overall condition of the stock market but here the question arise that is it so at present. According to Harvey (1995) the statistical values are changing day by day and people and market don’t suffer a lot with predefined holidays. But it’s a research from united state’s point of view. Pakistan’s people have a different attitude towards different things. Here another thing is much noticeable that whether the current position of stock market and its results remain unchanged or not, after similar holidays trend. A single day closure affects a lot on over all condition of the stock market and may cause a big dip. It means that the business suffers if it is either a predefined closure or an unpredictable one. Different reasons for closure are defined by different scholars and authors. The definition of a holiday does just not only mean Saturdays and Sundays but more over it also consist of different closures that occur on different events throughout a calendar year.

A man earns more who even works on Saturdays and Sundays then those who go on a weekend to enjoy their holidays. (Suntum 2005) Same is the case with the market; if the markets set out on a long weekend or even short or half days on Fridays then definitely whole of the market will suffer a lot and as a result of which, all the business activities will suffer. Definitely, the man on long weekend earns less as compared to one who even works on a non working day without any daybreak if both are on same level of earning. Different quantitative analysis are done by (Wung 1994) which show that the over all, holidays cause a declining effect on stock market and it is also considered that a straight decline seems when ever business closes, even if it’s a weekend, national holidays or whatever the circumstances are. Different analysts also consider it to be great dips in market after unpredictable closures and the market index falls badly and causes great loss. It is verified that market condition seems well before that predictable or unpredictable vacation but market opens with low index rating and investors seems to be inactive, as it’s a trendy technique. So simply we can say that the closure by any mean causes a great damage to market’s reputation. It’s an international trend that the countries’ economy and its market suffer a lot or even demolish if its calendar has too many red marks (holidays).

Turn of the Week Effect

According to Dimson (1988) it’s an old tactic to think that the market boom will not be of such value as it’s before weekend. Normally such deliberation appears among different scholars that market goes in a decline condition after weekends but Dimson totally refused the theory, moreover in later research and reverences Previts (2006) proves it to be true that in normal trading days the market floats well as compared to weekends and after weekends the market declines. This may be economic and conditional depended and may vary from country to country. It can also be proved by Cataldo (1998) who by utilizing different comparisons confirmed that the trend is true. He also worked on this theory by using different static tables. The overall conditions and analysis shows that a great affect is seen on stock market after the reopening on Mondays, so weekends cause a big immerse and the overall condition of the business goes through a bad phase on Mondays.

As discussed above, normally the