(4) Unexpected Timings Of Rains Can Cause Sudden Drop In Share Prices
It is one of the most popular ways rains can affect stock markets. Rains, winds or cloudy atmosphere is a gift of nature. It is completely a natural phenomenon that can occur anytime.
Sometimes, unexpected heavy rains or heavy winds in form of cyclone may occur. These forms of natural disasters can significantly damage standing crop to much higher extent. It can even cause premature fall of fruits & crops. This often results in insufficient amount of supply to meet the demand.
Thus, it causes a rise in rate of inflation. A high rate of inflation is again adversely affects the sales of several industries. Once, it is analyzed by investors, they start selling stocks of such entities. Therefore, a sudden drop in share price is noticed in such sectors.
(5) Delay In Monsoon Rains Can Increase Volatility
It is one of the most typical ways rains can affect stock markets. A delay in release of any positive or negative news in the market can increase volatility.
Similarly, a delay in monsoon rains in an agricultural economy can increase nervousness among investors or traders. This nervousness often results in increased volatility in stock markets.
In such situation, investors are often uncertain about the right direction of share markets. It can cause share price to move on either side.
Some investors can also prefer to remain on sidelines until things are clear. Thus, investors or traders are advised to trade cautiously during such uncertain times.
- Rains & Stock Markets: Shutterstock, NYSE and BSE