A STUDY ON HERD BEHAVIOUR AMONG RETAIL INVESTORS AT NSE AND BSE IN THE INDIAN MARKET
A STUDY ON HERD BEHAVIOUR AMONG RETAIL INVESTORS AT NSE AND BSE IN THE INDIAN MARKET
Authors:
- VINU SAKTHI. S Student of II MBA Department of Management Studies Nehru Institute of Technology Coimbatore, Tamil Nadu.
Email ID sakthivinu410@gmail.com
- LAVANYA A, Assistant Professor. Department of the management Studies, Nehru Institution Of Technology, Coimbatore, Tamil Nadu.
Email ID a.lavanya0811@gmail.com
ABSTRACT:
This study examines the presence and impact of herd behaviour among retail investors in the Indian stock market, particularly focusing on trading activities in the National Stock Exchange and Bombay Stock Exchange. The research adopts an analytical approach using primary data collected from retail investors through a structured questionnaire. Statistical tools such as correlation, regression, ANOVA, and chi-square tests are employed to analyse the relationship between psychological, social, and market factors and herd behaviour. The findings reveal that social influence and market volatility significantly contribute to herd behaviour, while financial literacy reduces irrational decision-making. The study provides practical insights for investors and policymakers to minimize the negative consequences of herd-driven investment decisions. This study examines herd behaviour among retail investors in the Indian stock market, with a focus on trading activities in the National Stock Exchange and Bombay Stock Exchange. The research adopts an analytical approach using primary data collected from 267 respondents through a structured questionnaire. Statistical tools such as descriptive statistics, correlation, regression, ANOVA, and chi-square tests are used to analyse the influence of psychological, social, market, and demographic factors on herd behaviour. The findings indicate that social and market factors have a strong positive influence, while financial literacy significantly reduces herd behaviour. The study provides insights for investors and policymakers to improve rational decision-making and market efficiency.
In addition to identifying key determinants, the study also evaluates how behavioural biases interact with external market signals to influence investment patterns. It highlights that during periods of high volatility, investors are more likely to rely on collective market sentiment rather than fundamental analysis. The research further explores the role of information asymmetry, where unequal access to reliable financial information leads investors to depend on observable actions of others. This tendency is particularly evident among less experienced participants, who often perceive crowd behaviour as a safer strategy in uncertain conditions.
Moreover, the study contributes to the growing field of behavioural finance by providing empirical evidence on the extent to which emotional and cognitive biases shape investment decisions in emerging markets. It also emphasizes the importance of structured financial education and awareness programs to strengthen independent decision-making skills. By integrating statistical analysis with behavioural insights, the study offers a comprehensive understanding of herd behaviour and its implications for market stability, ultimately supporting the development of more efficient and informed investment practices.
Key Words: The study focuses on herd behaviour, retail investors, Indian stock market, NSE and BSE, behavioural finance, psychological factors, social influence, market factors, financial literacy, investment decision-making, market volatility, statistical analysis, and investor behaviour patterns.