It is a interesting question from a sentimental point of view. Everyone gets excited especially the media channels and speculators when a popular chairman rejoins the board or a Resigns from the Board. Some how you need to understand that markets are crazy and illogical. So today I brought two case studies to understand how sentiment worked in the past especially when a popular Executive Board Member Joins/Resigns.
Mr.Narayanamurthy Chairman – Rejoins Board
On 1st June 2013 Mr. Narayanamurthy rejoins Infosys Board as Executive Chariman. Quite a positive sentiment revival for Infosys. People rejoiced before the stock market opens. On monday (3rd June 2013) market opened with a gap up along with 200 points price movement from the previous days close in just first 2 minutes of the market open. And then shorter term top is made for that week.
Jubilant CEO Ajay Kaul Resigns
On 20th September 2016, Jubilant CEO – Ajay Kaul resigned after 11 years at the helm of the India franchise of Domino’s Pizza. Quite a serious negative sentiment for investors. Stock Price opened gap down and dropped almost 8% when the market opens and made the bottom in the first 15 minutes and that is the bottom made for the week.
Moral of the Story : Markets Reacts to those momentary reactions it favors the crowd sentiment initially and it is a impulsive reaction which doesn’t last for a long time. Initial direction is always in the favor of the crowd thinking!
Now lets have a live study on 26th Oct 2016 how the markets reacts to the recent Cyrus Mistry Resignation and Ratan Tata takeover of Tata Group
May be market might have some ready made answer!