(2) Scanty Rains Can Cause Decrease In Share Price
It is one of the most common ways rains can affect stock markets. Like excess rains, scanty or negligible rains can adversely affect crop production. This effect is particularly visible in area where land under irrigation is particularly dependent on rain water.
If rains are scanty or negligible than crops can’t grow & dies prematurely. This results in overall decrease in crop production that is insufficient to meet demand.
It can cause rise in rate of inflation which again damages home budget. This can drastically affect purchasing power of general public.
Therefore, sales of companies like FMCG, automobile, consumer goods & many more get affected. This sharp negative effect is quickly assessed by big investors or mutual funds in stock markets. They start selling stocks of concerned companies to cause decrease in share price.
(3) Normal Rains Can Boost Share Price
It is one of the most important ways rains can affect stock markets. A normal or robust monsoon rains is a boon to agricultural produce. Crops that are being raised can get sufficient amount of rain water. This is particularly needed to boost crop production.
A good crop means good income for farmers & higher spending power in economy. It also results in quick repayment of agricultural loans to banks. It boosts balance sheet of public sector banks due to loan repayment.
A good crop production is also necessary to curb rising inflation. A normal rate of inflation with higher demand of goods & service is considered good to boost economic growth of a country. It is considered best for almost every sector of business.
It also helps government to take necessary steps in the development of country. Once a normal monsoon is accessed by investors or mutual funds, they quickly start buying stocks of concerned companies.
This can act as a good trigger to boost share price. Therefore, it is always considered best for stock markets of a country.
- Rains & Stock Markets: Shutterstock, NYSE and BSE