Reviewing The Factors Affecting Investor Behavior In Indian Stock Markets: A Behavioral Finance Study

Abstract

This research paper aims to provide a comprehensive review of the factors influencing investor behavior in the Indian stock market through the lens of behavioral finance. The study explores the psychological and cognitive biases that shape investment decisions, challenging the traditional assumptions of rational decision-making. By analyzing existing literature and empirical evidence, the paper identifies key factors such as herd behavior, overconfidence, risk aversion, and emotional influences that impact investor sentiment and decision-making processes. The research employs a systematic literature review methodology, drawing insights from scholarly articles, journals, and relevant databases. The findings highlight the significant role of behavioral factors in investment decisions and underscore the importance of incorporating behavioral finance principles into investment strategies and market analysis. The paper contributes to the growing body of knowledge in behavioral finance and provides valuable insights for investors, financial advisors, and policymakers in understanding and mitigating the impact of cognitive biases on investment outcomes.