International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

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Market Dynamics and External Factors Influencing Investor Behaviour A Behavioral Finance Perspective on Mutual Fund Investors in Karnataka

Author(s) Mr. Thrishul G S, Dr. S. Venkatesh
Country India
Abstract This study examines the impact of market dynamics and external factors on the investment behaviour of mutual fund investors in Karnataka through the lens of behavioral finance. The research explores how investors respond to market volatility, economic and political developments, policy changes, expert opinions, and global events. It aims to identify the degree to which external stimuli influence investor confidence, risk-taking, and decision-making biases. Primary data were collected from 400 mutual fund investors across the four administrative divisions of Karnataka—Bengaluru, Mysuru, Belagavi, and Kalaburagi—using a structured Likert-scale questionnaire. Statistical techniques such as correlation, regression, and structural equation modeling (SEM) were employed to analyze the relationships among market dynamics, external factors, and investor behaviour.
The findings indicate that external events significantly affect investment decisions, particularly in periods of high market uncertainty. Market news, expert opinions, and macroeconomic policy changes were found to trigger behavioral biases such as herd behavior, overconfidence, and regret aversion. Financially literate investors exhibited greater resilience and rational decision-making during turbulent market conditions. The study concludes that behavioral factors mediate the influence of market events on investor decisions and emphasizes the importance of financial literacy and awareness in reducing emotionally driven investment actions.
Keywords Behavioral Finance; Investor Behaviour; Market Dynamics; External Factors; Mutual Funds; Financial Literacy; Karnataka; Investment Psychology; Market Volatility; Economic Events.
Field Business Administration
Published In Volume 7, Issue 6, November-December 2025
Published On 2025-12-24
DOI https://doi.org/10.36948/ijfmr.2025.v07i06.63941
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