Behavioral finance biases and their impact on investment strategies and decisions of individual investors in India

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Bagade, Rahul Manvendra
Issue Date
MSc in International Accounting and Finance
Dublin Business School
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This dissertation is a study of the issue of behavioral biases from the perspective of individual investors. Its purpose is to ascertain how important this knowledge is to the individual investors. The behavioral biases problem can become more important due to the growth of number of individual investors over last few years and predictions are that it will continue to grow in the coming years. Behavioral biases come from the behavioral finance theory, the theory that embraces finance and psychology. Behavioral finance theory started to gain significance since the moment it was discovered that investors and markets are irrational. It was established that individual investors are the ones who are more prone to behavioral biases as they belong from different professional backgrounds. It is generally understood that we all learn from our own mistakes, but the process can take too long that it can be too late. This dissertation will enable individual investors to understand the challenges they are facing, namely to problems connected with behavioral biases. The aim of this dissertation is to investigate whether the behavioral financial biases impact the investment strategies and decisions of individual investors in India and also to examine whether the existence of psychological factors of individual investors in the Indian stock market is similar to that found in the other countries or not.