Stock market returns and the weather effect in Sri Lanka

This study investigated the effect of three weather factors (temperature, humidity and wind speed), on the returns of the Sri Lanka stock index (CSE-Colombo Stock Exchange). The study used the daily weather data of Sri Lanka capital city, namely, Colombo. Econometric models like Descriptive Statistics, ADF Test and OLS regression Test were used for the analysis. This paper provides significant evidences for correlation between weather factor and stock market returns in Sri Lanka. The findings of this study will be useful for the investing community, Government and Policy Regulators in the sample country. The study results indicate that only one weather factor, namely, wind speed influenced the Colombo stock market index.