The Impact of Behavioural Factors on Investor's Trading Decisions

Abstract

The objective of this study was to analyze the behavioural biases which impact the investment decision making and investment performance of the investors in the Indian Stock Market. In this research, the researcher creatively investigates these suppositions by utilizing "Structural Equation Modelling" (SEM) and collected primary data from a nation-wide survey with 302 individual investors and analyzed various principles of behavioural finance, which includes behavioural biases which are: Herding, Market factors and Heuristics include Representativeness, Loss Aversion, Mental Accounting and Disposition Effect which influences the individual's decisions regarding their investment in Indian Stock Market. This study's results offer strong proof that these behavioural biases influence the individual trading behaviour and their investment performance, particularly Herding behaviour factor is the highest and the only factor that has a constructive bearing on the investment enactment of an investor through the path coefficient of 0.16