An Analysis of the Indian Retail Investing Paradox

Author(s)	Dr. Sanjay Kumar P. Mishra
Country	India
Abstract	This paper examines behavioural finance and Investment Decisions, explaining why Indian investors often make irrational decisions in spite of widely available information. It discusses common biases such as overconfidence, herding and loss aversion and uses recent evidence in the Indian context to show how these shape investor behaviour. People generally sell in panic when the market falls, buy whatever stock their neighbour, friends or analysts are talking about, and hold on to loss-making shares far longer than they should. This paper looks at behavioural finance, the branch of finance that considers human psychology very seriously, and tries to explain why Indian investors, despite currently having more information at their fingertips than ever before, keep on making the same avoidable mistakes. This paper also explains what recent Indian data tells us about investor behaviour, and what, if anything, can be done about it.
Keywords	Behavioural finance, investor psychology, biases, herding, overconfidence, financial literacy, India
Published In	Volume 6, Issue 5, September-October 2024
Published On	2024-10-05

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