Intense rainfall in Mumbai is influencing not only the weather conditions but also contributing to increased investor returns due to the growing popularity of the country's first weather derivative contract, RainMumbai.
RainMumbai Contract Dynamics
During the first week of July, the contract showed growth parallel to the rainfall, demonstrating a significant increase since its launch. The RainMumbai contract for July on the NCDEX closed at ₹2,330 on July 1, and traded at ₹2,638 by Tuesday, July 7, representing an increase of about 12.50 percent for the current month.
Looking at the overall trend since its start, the contract has shown a sharp rise. The July contract was launched on May 29 at ₹2,020 and is currently trading at ₹2,638, corresponding to an approximate growth of 30 percent since its introduction.
Reasons for Contract Growth
Indrajit Paul, Head of Research at AgriCorp International and a commodities expert, explained that RainMumbai is a contract dependent on the amount of precipitation. Since Mumbai received heavy rains this month, the contract began to rise sharply. Previously, last month, the contract remained relatively stable due to a weak monsoon, but towards the end of the month, it started gaining momentum as the monsoon situation improved. On June 19, the contract reached a low of ₹1,905, after which it rose continuously to a record high of ₹2,765 on Tuesday.
Future Forecasts
Ajay Kedia, Director at Kedia Advisory, predicts that the positive trend for the contract will continue in the coming days. According to meteorological forecasts, rains in Mumbai are likely to continue until mid-July, with the probability of daily rainfall estimated between 60 and 75 percent, which should support the Mumbai rain contract.
Trading Volume and Contract Specifics
According to NCDEX, from its launch on May 29 to July 6, 22,560 lots of transactions were made. The total value of these operations amounted to ₹23,505 lakh, or approximately ₹235 crore. The highest daily trading volume was recorded on June 15, when 2,039 lots were sold.
NCDEX launched the country's first exchange-traded weather derivative contract on May 29. This contract is based on rainfall data in Mumbai and is linked to the city's long-term average rainfall of 2,206.7 millimeters (mm). The contract has a multiplier of ₹50 for every millimeter change in rainfall, meaning its value changes by ₹50 for a 1 mm change in precipitation. It was developed with technical support from IIT Bombay and uses official data from the Indian Meteorological Department (IMD).



