EFFECTS OF WEATHER ON AGRICULTURAL INDEX IN INDIA: A STUDY WITH REFERENCE TO MCX AGRI

Many behavioral studies have been analyzed and discussed, to find the link between weather factors and market returns. However, the present study examines the impact of three weather factors, in the five major cities of India, on the daily commodity index returns of the MCX Agri, for the period of January 1st 2007 to December 31st 2017 (11years). OLS Regression model has been applied to investigate the market's response to climate change. The empirical evidence shows that Chennai Temperature, Delhi Humidity and Mumbai Wind Speed affected the commodity index returns in India. The findings of present study further support the earlier findings about the inclusion of economically neutral behavioral variables in asset pricing models. The study has also important suggestion for individual investors and financial institutions planning, to invest in the MCX Agricultural commodity market. The results of the study suggest that investors can be benefited if they consider the weather factors and climate conditions. These findings also provide innovative perspective on investment decision by the investors who are trading in agricultural products