Understanding the Psyche of Retail Investors in India and Their Reactions towards Market Highs and Lows While Making Investment Decisions during the Times of Covid-19

ABSTRACT

Purpose: Behavioral finance explains the market anomalies and how the psychology of investors affects their investment decisions. Amidst the Coronavirus crisis, it becomes very important to understand the psyche of retail investors in India, how would they react to the market ups and downs, assessing their risk profile, and what sources of information they consider reliable while making investment decisions. Design/Methodology: A primary research was done, and a sample of 64 retail investors was collected using a structured questionnaire. Analysis was done using SPSS 21 and Microsoft Excel Findings: The results showed that investors are risk-averse and very cautious of where and how much they invest. In the two events when the market reached its lowest on 25th March 2020 and highest on 21st January 2021, the mind of investors was stable as they had somewhat anticipated the events and they did not engage in mindless selling or buying of stocks. Managerial Implications Studying the psyche of retail investors is very important and can help the stock broking firms to come out with customized and safe products for investors. Scope for Future Work The impact of Covid-19 on retail investors and stock market can also be studied using secondary data. This would validate the findings of primary data. Limitations: The main difficulty faced during the research was to collect the sample of only retail investors and the spread of coronavirus made it a little difficult to reach out to people