Akshaya, A.Gopalakrishna, B.V.2026-02-032025Journal of Environmental Management, 2025, 395, , pp. -3014797https://doi.org/10.1016/j.jenvman.2025.127946https://idr.nitk.ac.in/handle/123456789/19930The longstanding variation in average climate parameters, typically occurring over decades or longer, is known as climate change. The authors examine the impact of climate change anomalies, specifically the changes in temperature and precipitation, on the equity market. This empirical approach utilized monthly long-term time-series data from 1996 to 2024, comprising 348 observations. To test the empirical association between the variables, the study employed the autoregressive distributed lag (ARDL) and Nonlinear ARDL (NARDL) models. The findings of this analysis reveal a significant short-run symmetric effect of temperature changes on market volatility (? = 0.0004, p = 0.010). Increasing temperatures intensify market instability, suggesting that short-term climatic shocks amplify investor uncertainty and risk perception, and heighten market momentum. In contrast, increasing precipitation exhibits a long-term stabilizing effect (? = ?8.91e-06, p = 0.032), indicating that higher rainfall helps mitigate market instability over time. The alternative explanatory data from the World Bank and the GARCH model results are robust to the primary outcome. The study's outcomes provide valuable insights for regulatory bodies' climate disclosure policies and highlight the importance of proactive hazard management, particularly for investors in emerging markets and vulnerable sectors that are more susceptible to climate-driven volatility. © 2025 Elsevier LtdClimate modelsCommerceEconomic analysisElectronic tradingInvestmentsRainRisk perceptionAnomalyClimate anomaliesClimate parametersEmpirical analysisEmpirical approachEquity marketsMarket instabilityStock market dynamicsTime-series dataVolatilityClimate changeFinancial marketsclimate changeclimate effectempirical analysisequityrainfallrisk perceptionstock marketWorld BankArticleclimatenonhumanprecipitationstochastic modeltemperaturetime series analysisvolatilizationinvestmentClimate ChangeTemperature