An Empirical Study on Factors Governing Investment of Individual Investor in Equity

Abstract

The Indian equity market has seen a lot of fluctuations in the last decade. The BSE sensex as an indicator of the market has fluctuated from 10000 points to 21000 points and falling to 8000 points and making high of 30000 points and again now struggling to sustain around 30000 points. The Indian Equity markets are seeing inflows both from institutional investors as well as the retail investors. Even though the markets remain to be volatile but that has not deterred the investors from investing in the markets. In this context it becomes important to explore the behavioral factors that are governing investment behaviour in the Indian equity market. Equities are considered inherently riskier than investments in bonds. What makes equity investing risky? Is it because of the inconsistent performance of business behind the stock or is it because of the behavior of the market participants, who as a result of greed and fear get excessively optimistic and pessimistic about the future resulting in bull and bear phase? What are the behavioral traits that act as impediments (obstacles) in investing inequity?