“Biases And Its Factors Effecting Stock Market Investment Decisions: A Study Of Gujarat Investors”

Abstract

The theory in behavioural finance suggests that individual investors are not rational and are influenced by various behavioural biases while investing in stock market. The study conducted is an attempt to assess the factors of behavioral biases effecting individual investor of Gujarat while taking investment decision. Therefore, a descriptive research is being followed. The source of data was both primary as well as secondary. A well-structured questionnaire was used to collect data from 204 respondents, descriptive statistics and confirmatory factor analysis was used to analyse the data. Five biases namely Herd mentality, Overconfidence, Loss aversion, Representative and Anchoring bias were studied through observed variables and the CFA model resulted valid signifying that the observed variable were able to represent the latent variable correctly in the model. Moreover, the all these biases effected the investors ranging from 71% which was Loss Aversion to 85% which was Anchoring.