A REPORT

ON

A STUDY ON SOCIAL FACTORS INFLUENCING

INVESTOR BEHAVIOUR AND DECISION MAKING IN
THE INDIAN STOCK MARKET
Submitted by
Shinto Simon
Reg. No: 22PBA157
Under the Guidance of

Mr.Tinku Joy
Assistant Professor

Submitted in partial fulfillment of

the requirement for the award of the degree

Master of Business Administration

to
Mahatma Gandhi University,
Kottayam

Marian College Kuttikkanam (Autonomous)

Marian Institute of Management
Kuttikkanam P.O, Peerumade, Idukki

December 2023
1
 Marian College Kuttikkanam (Autonomus)
Marian Institute of Management
Kuttikkanam P.O, Peerumade, Idukki

CERTIFICATE

This is to certify that the Research entitled “A study on social factors influencing investor
behavior and decision making in the indian stock market”submitted to Mahatma Gandhi
University in partial fulfillment of the requirements for the award of the MBA degree is a
bonafide work done by Mr. SHINTO SIMON(22PBA157) during the Academic Year

2023 - 2024 under my supervision and guidance.

Mr. Tinku Joy Dr. T V Muralivallabhan

Faculty Guide Director

Place: Kuttikkanam

Date: / / 2023

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 DECLARATION

I Shinto Simon (22PBA157), MBA student of MARIAN INSTITUTE OF MANAGEMENT,

MARIAN COLLEGE KUTTIKKANAM (AUTONOMOUS), do hereby declare that the Research
Project conducted on A study on social factors influencing investor behavior and decision
making in the indian stock market under the guidance of Mr. Tinku Joy, Assistant Professor,
Marian Institute of Management, Kuttikkanam, in partial fulfillment of the requirement for the
award of the degree of Masters of Business Administration, is a bonafide study done by me. I also
declare that this report has not been previously formed or submitted for the award of any degree,
diploma, fellowship, or similar other titles by any other university, similar institutions, or to any
other person.

Place: Shinto Simon

Date: 22PBA157

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 ACKNOWLEDGEMENT

The satisfaction that accompanies the successful completion of any task would be incomplete without
mentioning the names of the people who made it possible, whose constant guidance, encouragement and
cooperation of intellectuals crowned me with the successful completion of the Research. I would like to
take this opportunity to thank them.

First and foremost, I thank God, the Almighty from the depth of my heart, who has been the source of
strength in the completion of this study. I take the great privilege to express my profound gratitude to my
institute, Marian Institute of Management, which has been instrumental in helping me in the completion
of my research project topic “A study on social factors influencing investor behavior and decision
making in the indian stock market”

I am extremely thankful and pay my gratitude to Dr T V Muralivalabhan, Director, Marian Institute of

Management.

I would like to express my sincere thanks to Mr Tinku Joy, the faculty guide who gave me guidance and
suggestions for the preparation of this report. I also extend my thanks to all department faculty members
for their help and encouragement. I am happy to express my gratitude to all those who helped me directly
or indirectly during my project and thank my family members and friends for their support and
encouragement.

SHINTO SIMON

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 TABLE OF CONTENTS

Sl. No CONTENT Pg.No

1 Introduction 1-3
1.1 Background of the study 3
1.2 Overview of the scenario 3
1.3 Research Problems 4
1.4 Research Questions 4
1.5 Research Objectives 5
1.6 Hypothesis of the study 5
1.7 Significance of the study 5
1.8 The scope of the study 6
1.9 Limitations of the research 7
1.10 Chapterisation scheme 8
2 Literature Review 7-23
2.1 Critical review 23
2.2 Conceptual Framework 23-24
2.3 Research gaps 24
3 Research Methodology 25
3.1 Overview of the methodology 26
3.2 Types of research 26
3.3 Sampling Methodology 26
3.4 Sample size 26
3.5 Tools used for analysis of data 27
3.6 Data type 27
3.7 Sampling strategy 27
4 Data Analysis
4.1 Data Analysis & Interpretation 29-31
4.2 Hypothesis Testing 32-37

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 5 Discussion and Findings
5.1 Findings 39
5.2 Suggestions 40
6 Conclusion
6.1 Scope for future research 42
6.2 Conclusion 43
7 Bibliography 44-47
Appendices 48-51

LIST OF TABLES

Table No Content Pg.No

4.1.1 Age of the respondents 29
4.1.2 Investment products of investors 30
4.2.1 Chi-square test of influence of family and culture 32
4.2.2 Chi-square test of financial literacy and social media 33
4.2.3 Correlation 35

LIST OF FIGURES

Fig No Content Pg.No

2.3.1 Theoretical Framework 24
4.1.1 Age of the respondents 29
4.1.2 Investment products of investors 30
4.1.3 Percentage of income invested 31
4.1.4 Influence of emotions 31

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 EXECUTIVE SUMMARY

This study aims to explore the investor behavior and decision-making within the context of the
Indian stock market. The primary objective is not only to attract new investors but also to cultivate
and sustain their loyalty in the highly competitive realm of stock trading. Focusing on variables
such as social media, family, risk and financial literacy and their impact on investor behaviour and
decision making, the research seeks to unravel the intricate nature of this relationship. By
investigating the statistically significant connection between investor behaviour and decision
making, the study aims to illuminate effective strategies to navigate complexities and establish
enduring investor behaviour in the ever-changing landscape of the Indian stock market. While this
research provides valuable insights into these dynamics, it is crucial to acknowledge the inherent
limitations in the study's design, including potential biases in data collection methods, temporal
constraints, and the contextual specificity of the findings.

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 CHAPTER 1

INTRODUCTION

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1 INTRODUCTION

The Indian stock market, often characterized by its dynamism and rapid growth, serves as a vital
component of the nation's economy. It acts as a beacon, attracting investors from diverse
backgrounds and with varying levels of experience. While traditional financial theories emphasize
rational decision-making based on information and market fundamentals, the Indian stock market
often witnesses deviations from such rationality. Investors' behavior and decision-making
processes are profoundly influenced by a multitude of social factors that extend beyond
conventional financial models.

Understanding investor behavior and the influence of social factors within the Indian stock market
is of paramount importance. India, with its vast and diverse population, presents a unique
landscape for the exploration of these factors and their impact on investment choices. This research
project seeks to delve into the intricate interplay of social factors that shape investor behavior and
decision-making processes in the Indian stock market.

The global financial landscape has evolved significantly over the past few decades, with the advent
of technology and the democratization of financial markets through online trading platforms.
Simultaneously, the role of social media, information dissemination, and investor sentiment has
grown substantially. Social factors such as cultural norms, peer pressure, information flow through
social networks, and investor sentiment have become crucial determinants influencing the
investment decisions of individuals in India.

Investor behavior, often characterized by patterns of herd mentality and irrational exuberance, can
lead to market bubbles and subsequent crashes. These deviations from rationality, driven by social
factors, have a substantial impact on market volatility and, consequently, the overall stability of
the Indian financial system. Therefore, it is imperative to understand these social factors
comprehensively and their impact on investor behavior and decision making.Furthermore, this
study is motivated by the potential policy implications of its findings. A deeper understanding of
the social factors influencing investor behavior can guide regulatory authorities and market
participants in devising strategies to promote financial literacy, enhance investor protection, and
ensure the efficient functioning of the Indian stock market.

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In the following sections of this research project, we will explore and analyze various social
factors, ranging from cultural influences to the role of social media, that affect investor behavior
in the Indian stock market. By shedding light on these factors and their implications, this study
aims to contribute to a more nuanced understanding of investor behavior and decision making
within the Indian context, ultimately benefiting both investors and the financial system as a whole.

1.1 BACKGROUND OF THE STUDY

This research aims to shed light on the intricate relationship between social factors and investor
behavior in the Indian stock market. Understanding how culture, family influences, risk, and social
media impact investment choices and strategies is crucial for investors, policymakers, and
financial analysts alike. The Indian stock market has long been a focal point of economic activity
in the country, attracting both domestic and international investors. As one of the fastest-growing
major economies globally, India's stock market plays a pivotal role in shaping its financial
landscape. However, the behavior and decision-making processes of investors in this dynamic
market are subject to numerous social factors that often remain understudied. This study will
contribute to the existing body of knowledge in finance and provide valuable insights for
stakeholders looking to navigate the complexities of the Indian stock market.

1.2 OVERVIEW OF THE SCENARIO

In the Indian stock market, investor behavior and decision-making are significantly influenced by
various social factors. Cultural influences, encompassing beliefs and practices, can shape market
sentiment, with festivals and cultural events impacting trading patterns. Social networks play a
pivotal role as investors often seek advice and opinions from friends, family, and online
communities, influencing their investment choices. Media, both traditional and digital, contributes
to investor perceptions, with news coverage capable of triggering buying or selling decisions. The
prevalent herd mentality in the Indian society leads investors to follow market trends, contributing
to momentum in specific stocks or sectors. Perceived social status is also a driving force, as some
investors align their choices with prevailing social trends to project success. Government policies,
including taxation and economic reforms, can sway investor sentiment, adding another layer of
social influence. Additionally, demographic factors such as age, gender, and income levels play a
role in shaping investment preferences. Financial literacy and awareness in society are crucial, as
informed investors are more likely to make rational decisions based on analysis rather than

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succumbing to social pressures. Navigating these multifaceted social factors is essential for
investors and analysts to anticipate market movements and make informed decisions in the
dynamic landscape of the Indian stock market.

1.3 RESEARCH PROBLEMS

The purpose of conducting a study on the social factors influencing investor behavior and decision-
making in the Indian stock market is to gain a comprehensive understanding of how social
dynamics impact investment choices in this specific financial landscape. In recent years, India has
witnessed significant growth in its stock market, attracting a diverse range of investors. However,
the Indian stock market is not only influenced by economic and financial indicators but also by a
complex interplay of social factors such as cultural norms, social networks, media, and peer
influence. By undertaking this research, we aim to uncover the extent to which these social factors
affect investors' perceptions, attitudes, and decision-making processes. This knowledge can be
invaluable for investors, financial institutions, policymakers, and regulators, as it can inform the
development of more effective investment strategies, risk management techniques, and market
regulations that take into account the social aspects of investment behavior, ultimately contributing
to a more stable and efficient Indian stock market.

1.4 RESEARCH QUESTIONS

1. What are the key social factors that influence individual investors' decision-making in the Indian
stock market?

2. How does social media engagement and sentiment impact the investment choices of retail
investors in India's stock market?

3. To what extent do cultural norms and social networks affect the investment preferences and
strategies of Indian investors?

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1.5 RESEARCH OBJECTIVES

1. To identify key social factors that determine the primary social factors that have a significant
impact on investor behavior and decision-making in the Indian stock market.

2. To analyze the influence of family in investor behavior and investment decisions.

3. To investigate cultural influences including cultural norms, values, and traditions, impact
investor behavior and choices in the Indian stock market.

4. To analyze the influence social media investor behavior and investment decisions.

1.6 HYPOTHESIS OF THE STUDY

H0: Family and culture not have significant influence on investor behavior and decision-making
in the Indian stock market.

H1: Family and culture have significant influence on investor behavior and decision-making in the
Indian stock market.

H0: Financial literacy and social media not have significant influence on investor behavior and
decision-making in the Indian stock market.

H1: Financial literacy and social media have significant influence on investor behavior and
decision-making in the Indian stock market.

1.7 SIGNIFICANCE OF THE STUDY

Examining social factors influencing investor behavior and decision-making in the Indian stock
market is crucial. Understanding these dynamics can provide insights into how societal elements
impact investment choices. It involves exploring how cultural, economic, and demographic factors
shape investor perceptions and risk tolerance. This study aims to uncover patterns that influence
stock market participation, portfolio diversification, and overall investment strategies. By delving
into social aspects, we can gain a comprehensive understanding of the intricate interplay between
human behavior and financial markets, contributing valuable knowledge to the field of investment
research in the Indian context.

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1.8 SCOPE OF THE STUDY

This study mainly focuses on social factors influencing investor behavior and decision-making in
the Indian stock market seeks to explore the intricate interplay between social elements and
investment decisions. The scope of this research encompasses a comprehensive analysis of how
social factors such as how culture, family influences, risk, and social media affect the behavior and
choices of investors in the Indian stock market. Understanding how these social dynamics impact
investment decisions is crucial for investors, financial institutions, and policymakers to develop
strategies that can optimize investment outcomes and market stability. The study will delve into
the psychological aspects, behavioral biases, and social networks that shape investment
preferences and decision-making, aiming to provide valuable insights into improving investor
education, market regulations, and financial literacy initiatives to enhance the Indian stock
market's efficiency and transparency. Additionally, it will investigate how technological
advancements and the rise of social media have further amplified the influence of social factors on
investor behavior, potentially reshaping the traditional landscape of financial markets in India.

1.9 LIMITATIONS OF THE STUDY

The study is subjected to some limitations. The study has been done only in the investors in Kerala.
Findings of the survey are based on the assumption that the respondents have given correct
information. Some of the respondents were reluctant to answer. Time was another constraint. More
descriptive statistical analysis methods such as the factor analysis aren’t employed since the nature
of the study was confined to the validation of relationships among different variables.

1.10 CHAPTERISATION SCHEME

Chapter 1: Introduction

Chapter 2: Literature Review

Chapter 3 Research Methodology

Chapter 4: Discussions and Findings

Chapter 5: Conclusion and Suggestions

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 CHAPTER 2

LITERATURE REVIEW

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2.1 LITERATURE REVIEW
1.Rania Elouidani & Outouzzalt, A 2023 This study examines various behavioral factors
influencing individual investors. It analyzed 101 responses from Moroccan investors'
questionnaires, revealing that factors like financial expectations, overconfidence, and financial
education significantly affect investment intentions, while financial situation, financial self-
efficacy, and investment intentions influence stock market participation. Moreover, the study
disproved the idea that investment intentions mediate the relationship between individual variables
and stock market participation.

2.Sreenivas T & Rajesh Babu Dasari 2020 This study focuses on the impact of heuristic-driven
factors on individual investors' decisions in the Indian stock market. It explores heuristic factors
like Representativeness, Herd Behavior, Overconfidence, Anchoring, and Availability heuristics.
The methodology relies on secondary data from various journals related to these heuristic
factors.Behavioral finance, a subset of finance, delves into how human psychology affects
financial market decision-making. It acknowledges that investors are influenced by psychological
and emotional factors alongside rationality. The field originated from the work of psychologists
Kahneman and Tversky, who introduced the availability heuristic, emphasizing how people assess
probabilities based on the ease of recalling similar instances.

3. Girish Kumar Painoli 2019 This study investigates the influence of various factors on the
investment decisions of individual investors in the Indian stock market, particularly focusing on
millennials and young investors. The study surveyed 253 such investors to gain insights into the
diverse elements that shape their decision-making processes, which may not always align with
conventional market regulations.The research adopted a multi-step approach, beginning with
exploratory factor analysis (EFA) to identify key factors falling into three categories: economic,
sociocultural, and psychological. Subsequently, confirmatory factor analysis (CFA) was employed
to validate the measurement instruments used in the study. Finally, the study utilized structural
equation modeling (SEM) to model the impact of these selected factors on individual investment
decision-making.The noteworthy findings of the study reveal that all three categories of factors—
economic, sociocultural, and psychological—significantly influence investor decision making. Of
these, economic factors emerge as the most influential. These findings carry implications for

15
various stakeholders, including policymakers, stock market companies, and investors themselves,
offering valuable insights into the dynamics that shape investment decisions in the thriving Indian
stock market.
4.Purna Man Shrestha 2020 This research study examines the factors impacting investment
decisions among Nepalese investors in the stock market, based on a survey of 110 respondents
from the Surkhet Valley. The data collection utilized a structured questionnaire encompassing
various question types, such as yes/no, multiple choice, ranking, and Likert scale questions. The
study was conducted in June 2018 and categorizes influencing factors into three main variables:
company-related (CRV), risk and return-related (RRV), and market-related (MRV)
variables.Within the CRV category, factors such as the management team, financial performance,
company size, earnings per share (EPS), and dividends per share (DPS) were considered. In the
RRV category, factors like expected return, past return, company risk, and liquidity of securities
were examined. Lastly, the MRV category encompassed factors such as market information,
market share prices, and dividend growth.The study's key findings reveal that a majority of
investors prefer buying stocks from the primary market, conduct thorough analyses of companies
before making investment decisions, periodically monitor their investment portfolios, and
primarily use their own savings for stock investments. Importantly, the study concludes that
Nepalese investors are more influenced by CRV factors than MRV and RRV factors, with a
consistently positive and significant coefficient observed for CRV across all regression models.
This suggests that Nepalese investors tend to base their investment decisions on company-specific
variables within the Nepalese market.
5.Haritha PH 2019 This focuses on the relationship between various factors that influence
investors' sentiment (IS) and their decision-making (DM) processes, specifically among individual
investors. It introduces a novel conceptual framework that incorporates elements such as herding
behavior, market effects, and awareness factors in understanding IS and its impact on DM.The
findings of the study highlight that market effects and herding behavior exert the most significant
influence on investors' sentiment. Additionally, among the various sources of awareness, the
internet has the least impact when compared to media, social interaction, and advocate
recommendations.The practical implications of this research are valuable for individual investors
as it can assist them in making more informed investment decisions and avoiding common pitfalls
associated with sentiment-driven choices. It also suggests the need to enhance awareness about

16
investors' sentiment among individuals, thereby improving their comprehension of financial
environments and boosting their confidence in investment decisions.

6.M. Junais Khawaja 2021 This study aims to identify the factors that influence investor behavior
in the Saudi Stock Market.The findings of this research reveal that several factors significantly
impact investor behavior in the Saudi Stock Market. These influential factors include the historical
performance of stocks, financial statements, the company's status within its industry, the reputation
of the firm, and expected corporate earnings. Notably, the image that a company has cultivated
over time, based on its financial practices, has a substantial influence on investor decisions,
outweighing advocate recommendations. Furthermore, the study highlights that factors such as
gender and age do not significantly affect investment behavior, whereas educational qualifications,
professional experience, and investment volume have a significant impact.While the study sheds
light on the factors affecting investor behavior, it does not address the issue of investor
overconfidence and its implications for the Saudi Stock Market, which could be an area for future
research.This study contributes to the field of behavioral finance in Saudi Arabia, serving as a
reference material for investors, companies, and government policymakers. It stands out by
incorporating individual investor characteristics and exploring the diverse factors that shape
investor behavior in the Saudi context, distinguishing it from previous studies.

7.Rania Elouidani 2023 This study focus on exploring various behavioral factors that impact the
decision-making process of Moroccan individual investors. The findings of the study illuminate
significant behavioral factors that influence both investment intention and participation in the stock
market. Notably, financial expectations, overconfidence, and financial education were identified
as crucial factors significantly affecting the intention to invest. On the other hand, financial
situation, financial self-efficacy, and investment intention were found to have a significant impact
on stock market participation.Furthermore, the study investigated the hypothesis of investment
intention mediating the relationship between the identified variables and stock market
participation. However, the results indicated a rejection of this hypothesis, suggesting a more direct
influence of the identified factors on stock market participation without mediation through
investment intention. This study adds to the growing body of knowledge in behavioral finance,
shedding light on the nuanced interplay of behavioral factors in investment decision-making,
specifically within the context of Moroccan investors.

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8.Devanashi Kothari 2020 This empirical analysis explores the factors influencing the
participation of retail investors in the Indian Equity Market, with a notable focus on the relatively
low penetration rate of 2.5% among the Indian population, as reported by the Economic Times in
January 2019. The study adopts Confirmatory Factor Analysis (CFA) and Path Analysis to validate
key factors identified from existing literature.The factors under investigation include Herd
Behavior, Capital Appreciation, Tax Benefits, Online Trading, Stock Brokers' Influence, Stock
Price Movements, Market Volatility, Dividend Returns, Degree of Risk, Individual Financial
Needs, and Investment Advisories.The CFA results reveal that Herd Behavior, Capital
Appreciation, Tax Benefits, Online Trading, Stock Brokers' Influence, and Investment Advisories
are the primary factors that significantly influence retail investors' behavior and decisions
regarding investments in the Indian Equity Market. This study offers valuable insights into the
dynamics affecting retail investor participation in the Indian Equity Market, shedding light on the
critical factors that shape their attitudes and investment behaviors.

9.T Sreenivas 2020 This research study focuses on the critical process of decision-making in
investment activities and aims to examine the rational factors influencing investment decisions,
particularly concerning the Indian stock market. The study challenges the assumption of complete
rationality in conventional economic theories and seeks to understand how various rational factors
affect investment choices, taking into account investors' demographic characteristics.The collected
data underwent systematic organization, tabulation, and analysis using statistical tools like SPSS
and AMOS software. Structural Equation Modeling (SEM) was employed to depict the
relationships between various rational constructs and investment decisions. The study formulated
five hypotheses based on rational factors with the assumption that these factors have a significant
positive impact on investor decision-making.The study's findings suggest that financial parameters
and project details do not appear to significantly influence investors' decision-making processes.
This research contributes to our understanding of investment behavior, shedding light on the role
of rational factors in shaping investment decisions in the context of the Indian stock market.

10.Anuradha Samal 2021 This study focuses into the behavioral finance, focusing on how
cognitive errors and emotions impact the decision-making process of investors. Specifically, it
aims to shed light on the factors influencing behavioral biases in the context of Odisha, India,
where many investors, particularly retail and small ones, may lack in-depth knowledge about the

18
complexities of the stock market and investment mechanisms.The research recognizes that
investment practices among Odisha investors often occur without the necessary information and
knowledge, potentially leading to behavioral biases. As a response to this situation, the study seeks
to identify and analyze the major factors contributing to five significant behavioral biases:
Overconfidence, Herding, Cognitive Dissonance, Regret Aversion, and Loss Aversion.By
exploring these factors, the study aims to empower Odisha investors to make more rational
investment decisions, thereby improving their financial security. This research contributes
valuable insights to the field of behavioral finance and offers guidance to investors in Odisha by
addressing the unique factors influencing their investment behavior and biases.

11.Raju Basnet Chhetri 2022 This study investigates the factors influencing the decision-making
behavior of individual stock investors in Nepal, with a focus on assessing the relative influence of
these factors across various demographic and socio-economic characteristics.The findings of the
study reveal that "Accounting and stock market information" emerged as the most influential factor
affecting the decision-making behavior of individual stock investors. Interestingly, the impact of
"Public and economic information" was found to differ significantly between male and female
investors but not among different age groups. Moreover, "Accounting and stock market
information" exhibited significant variations among investors with different educational
qualifications.The study highlights that traditional rational criteria, such as expected dividends,
expected corporate earnings, dividends paid, and the condition of financial statements, wield the
most significant influence on investors. Notably, many respondents appeared to lack awareness of
the consequences of contemporary issues like environmental records, increased firm involvement
in solving community problems, and the perceived ethics of firms. This suggests a pressing need
for awareness and educational campaigns to emphasize the importance of considering social,
ethical, and environmental values in investment decisions.This research provides valuable insights
into the factors shaping the decision-making behavior of Nepalese individual stock investors. It
underscores the importance of education and awareness campaigns to enhance investors'
understanding of various factors influencing investment choices beyond traditional financial
metrics.

12.Ashfaq Ahmed 2023 This study addresses a noteworthy gap in the field of behavioral finance,
focusing on the factors influencing the decision-making of retail investors in Pakistan, a

19
developing nation. While there has been growing interest in behavioral finance, a comprehensive
understanding of these factors, especially in emerging markets like Pakistan, has been lacking. The
research investigates a range of both behavioral and external factors that impact the financial
decision-making process of retail investors participating in the Pakistan stock market. The analysis
was conducted using Smart-PLS, which allowed for the examination of both the measurement
model and structural model.The results of this study are significant, revealing that all exogenous
variables examined in the research have a noteworthy and statistically significant influence on the
financial decisions made by retail investors in the Pakistan stock market. These findings carry
important implications for the field of behavioral finance and contribute to a deeper understanding
of investor behavior in the context of a developing economy.While this study adds valuable
insights, it's important to note that it has its limitations, as with any research. Nevertheless, it serves
as a crucial step in expanding our understanding of how behavioral and external factors impact
financial decision-making among retail investors, particularly in emerging markets like Pakistan.

13.Eko Suyono 2023 This study aims to investigate the impact of three key factors—financial
literacy, locus of control, and technological advancement—on the investment behavior of young
investors in the Purwokerto City of Indonesia, specifically among members of the Indonesia Stock
Investors group. The research utilizes a quantitative approach, relying on questionnaire-based data
collection.While the study offers valuable insights into the factors affecting the investment
behavior of young investors in Purwokerto, Indonesia, it is essential to acknowledge the
limitations, such as the restricted focus on one city in Indonesia. Nonetheless, this research
contributes to the field of financial accounting by advancing our understanding of the behavioral
factors that impact investment decision-making among young investors. The study's findings hold
potential for informing future research on similar topics, both in Indonesia and beyond.

14.Jinesh Jain 2021 This study addresses the growing interest in behavioral finance, which
challenges traditional views of investors' rationality and questions the efficiency of markets. While
previous research has explored various behavioral biases, there remains a need for a
comprehensive scale to measure these biases affecting investors' decision-making. This research
aims to fill this gap and create a reliable and valid scale for assessing the behavioral biases
influencing investors.The methodology employed follows a multi-stage approach. The first stage
involves an extensive literature review and interviews with experienced stockbrokers to identify

20
and gain insights into the dimensions of behavioral biases. In the second stage, 52 items measuring
these dimensions are generated and evaluated by a panel of judges. underscore that behavioral
biases are a multidimensional phenomenon significantly impacting investors' decisions. The
identified dimensions include Availability Bias, Representativeness.The findings Bias,
Overconfidence Bias, Market Factors, Herding, Anchoring, Mental Accounting, Regret Aversion,
Gamblers’ Fallacy, and Loss Aversion. The research contributes by presenting a reliable and valid
scale for measuring these behavioral biases, enhancing the understanding of their impact on equity
investors' decision-making processes.This study is original in its focus on behavioral finance
within the Indian context, striving to provide researchers with an empirically tested scale to
measure behavioral biases and their influence on investors. The developed instrument has the
potential to advance research in behavioral finance and assist other studies in achieving their
objectives in this field.

15.Girish P 2023 This study addresses a burgeoning area of interest: behavioral finance, which
challenges traditional notions of investor rationality and market efficiency. While prior research
has explored various behavioral biases, there's a clear need for a comprehensive scale to measure
these biases that affect investment decision-making. This study aims to bridge this gap by
developing a reliable and valid scale for assessing the behavioral biases influencing investors. The
study's results emphasize that behavioral biases constitute a multifaceted phenomenon with a
significant impact on investors' decision-making processes. Identified dimensions encompass
Availability Bias, Representativeness Bias, Overconfidence Bias, Market Factors, Herding,
Anchoring, Mental Accounting, Regret Aversion, Gamblers’ Fallacy, and Loss Aversion. The
research significantly contributes by presenting a reliable and valid scale for measuring these
behavioral biases, thus advancing our comprehension of their influence on equity investors'
decision-making.This study's originality lies in its focus on behavioral finance in the specific
context of India. It aims to provide researchers with a rigorously tested instrument for measuring
behavioral biases and their effects on investors. This newly developed tool holds promise for
advancing research in the field of behavioral finance and facilitating future studies in achieving
their objectives in this area.

16.Muksan Sachdeva & Ritu Lehal 2023 This study delves into the critical realm of stock
markets, recognizing them as pivotal for economic development and growth. Its primary aim is to

21
offer a comprehensive perspective on the factors that influence the decision-making process of
stock market investors, with a specific focus on individual investors in North India. Additionally,
the research conducts a multi-group analysis based on gender, examining how these factors may
differ between male and female investors.The findings are enlightening, indicating that various
factors, including firm image, accounting information, neutral information, advocate
recommendations, and personal financial needs, significantly impact investment decision-making.
Notably, the image of the firm emerges as the most influential factor, while advocate
recommendations have the least influence on investment decisions. Importantly, the study does not
identify significant differences in these factors between male and female investors.While the
research contributes valuable insights into investment decision-making processes, it does have
limitations, primarily related to its geographical scope, which is confined to North India.
Additionally, there's room for incorporating more demographic factors in predicting investment
decisions.This study is original and valuable for its comprehensive examination of various factors
influencing investment decisions, encompassing multiple aspects of the decision-making process.
Furthermore, it sheds light on signaling theory, contributing to the limited literature within the
Indian context.

17.Dr Rajeshwari Vaskula & Raju Gandham 2022 This study centers on investment behavior,
which encompasses individuals' and institutions' attitudes, perceptions, and willingness to allocate
their savings into various financial assets. It recognizes that personal disposable income can be
divided between consumption and savings, with the latter potentially becoming active when
invested in income-generating avenues.The primary objective of this research is to analyze the
factors that influence investment decision-making among investors in Hanumakonda district. Data
collection involved the use of a structured questionnaire distributed through simple random
sampling to 384 investors in the district.The research analysis revealed that several demographic
factors, including age, educational qualification, and annual income, significantly impact investors'
decisions regarding various investment avenues. These avenues encompass equity and stocks,
bonds and debentures, mutual funds, bank deposits, post office schemes, public provident fund,
life insurance, real estate, chit funds, and gold/silver.This study contributes valuable insights into
the factors shaping investment behavior in the Hanumakonda district. It underscores the role of
demographic variables in influencing investment decisions across a range of investment options,
shedding light on the dynamics of investment choices within the region.

22
18.Gbenga Festus Babarinde 2022 This study delves into the realm of behavioral finance, which
stands in contrast to traditional finance theory's assumption of perfect rationality in human actions.
Behavioral finance operates on the premise of bounded rationality, acknowledging that human
financial decision-making is influenced not only by reason but also by emotions, biases, heuristics,
and various behavioral traits and tendencies. These factors play a significant role in shaping
investment decisions.The study categorizes these behavioral traits into two main headings:
prospect theory and heuristic decision theory. In this review, the focus is on behavioral factors that
influence investment decisions from the perspective of heuristic decision theory.Theis highlights
several heuristics, including representativeness, overconfidence, availability, anchoring, and
adjustment, as factors that impact investment decision-making. It emphasizes the need for
strategies to identify, recognize, and manage these behavioral biases, particularly within the
financial community in Nigeria.

19.Gautham Ramkumar & Dr. Chithra Srinivasan 2021 This investigation addresses the
critical task of identifying the factors that influence the investment decisions of individual
investors. It particularly emphasizes the relevance of this investigation in the context of the
ongoing pandemic, which has introduced a VUCA (Volatility, Uncertainty, Complexity, and
Ambiguity) environment, making it imperative to understand how this environment affects
investor decision-making.To achieve this objective, the study employs exploratory factor analysis
to categorize and group the various factors that impact an investor's investment choices. Through
this analysis, the research identifies four key factors that significantly influence investment
preferences. Importantly, the reliability of these factors is substantiated by robust statistical
measures. In essence, this paper contributes by shedding light on the factors that guide individual
investors' investment decisions, especially in the challenging context of the current pandemic and
the associated VUCA environment. The use of statistical analysis reinforces the validity of the
identified factors, providing valuable insights for understanding and potentially predicting investor
behavior in uncertain times.This suggests that decision-making models should incorporate
elements from both traditional rationality theory and behavioral finance to achieve optimality in
investment decisions. Additionally, it advocates for more research in Nigeria focused on studying
and managing these heuristics, biases, and other aspects of human behavior that influence
investment activities. This would contribute to a more informed and effective investment decision-
making process in the region.

23
20.Prem Silwal & Shreya Bajracharya This study aims to uncover the behavioral factors that
influence individual investors' decisions and to examine the relationship between these factors and
investment decision performance. The variables under investigation include various biases and
heuristics such as Anchoring bias, Gambler’s Fallacy, Overconfidence bias, Availability and
Representativeness bias, along with prospect-related factors like Mental Accounting, Loss
Aversion, and Regret Aversion, as well as Market variables and Herding factors.The research
methodology employs both exploratory and confirmatory factor analysis, providing a
comprehensive approach to identifying and validating these behavioral factors. Additionally,
structural equation modeling is used to test the hypotheses related to the influence of these factors
on investment performance.The findings reveal several noteworthy insights. The prospect
behavioral factor exhibits a negative correlation with investment performance, indicating that it
may have adverse effects on investment decisions. In contrast, Herding, Market variables, and
Heuristic factors (including overconfidence and anchoring bias) display a positive correlation with
investment performance, suggesting that these factors can potentially enhance investment
outcomes.The study highlights the importance of considering herding behavior and heuristics in
investment decision-making, as they are associated with positive indications for investment
performance.

21.Nidhi Jain & Bikrant Kesari 2022 This study discusses the pivotal role of behavioral finance
in contemporary investment decision-making. In today's complex financial landscape, investors
are faced with a multitude of choices and decisions. Decision-making in the realm of investments
encompasses a wide spectrum of options, some straightforward and others intricate, demanding
nuanced approaches. Behavioral finance delves into the psychological facets of financial decision-
making, shedding light on how investors make choices. Often, investor behavior deviates from
rational and logical judgments due to various behavioral biases.Within the context of the Indian
financial system, this research explores the impact of behavioral biases on investment decisions
and their subsequent effect on an investor's financial risk tolerance. The study employs a
quantitative research approach to gather data related to behavioral biases and their influence on
investors' financial risk tolerance and decision-making processes. Statistical software packages
such as SmartPLS 2.0 and IBM SPSS 20 are utilized to analyze and validate the proposed
conceptual framework. Confirmatory Factor Analysis (CFA) and Structural Equation Modeling
(SEM) are applied to assess the model's validity using a sample size of 600 investors in India.This

24
study contributes on three fronts. First, it quantifies the extent to which behavioral biases influence
investors' decision-making processes. Second, it measures the impact of these biases on an
investor's financial risk tolerance. Third, it evaluates how investors' decision-making processes
affect their financial risk tolerance.The findings of the research highlight that behavioral biases
significantly influence both investor decision-making and financial risk tolerance.

22.Raja Bandara 2023 This research discusses the significance of rationality among investors in
the Colombo Stock Exchange (CSE) and its implications for the country's economic development.
It emphasizes that investor behavior in the CSE can be both rational and irrational due to various
factors influencing investment decisions. The study highlights the importance of understanding
investor behavior to enhance rationality in the market. It also notes that financial literacy and
investment skills can contribute to improving the rationality of investment decisions.Furthermore,
the review acknowledges the significant impact of the COVID-19 pandemic on the growth of
digital financial services (DFS) and online trading within the CSE, emphasizing the need for
investors to adapt to digital advancements. The primary objectives of the study are to analyze the
influence of financial literacy and investment skills on investor behavior, with an additional focus
on the mediating role of digital literacy.The research perspective posits that financial literacy
equips investors with the knowledge to use money efficiently, while investment skills enable them
to gather, analyze, and research data for making profitable investment decisions within the CSE.
Digital literacy is deemed crucial for applying financial knowledge and investment skills in making
investment decisions in the digital era.The key findings of the study indicate that financial literacy
and investment skills do have an impact on investor behavior within the CSE. However, digital
literacy was found not to significantly influence investor behavior. Additionally, the study did not
find significant evidence for the mediating role of digital literacy in the context of investor
behavior.This research underscores the importance of rationality among investors in the CSE for
the development of the country's economy. It highlights the role of financial literacy and
investment skills in shaping investor behavior but does not find strong support for the mediating
influence of digital literacy in this specific context.

23.Aditi Kamath & Subramanya Kumar N 2023 This study investigates the relationship
between Indian retail investors' Big-five personality traits (Neuroticism, Extraversion, Openness
to experience, Agreeableness, and Conscientiousness) and their short-term and long-term

25
investment decision-making, while also examining the potential mediating effect of investor
sentiment. It acknowledges the growing body of research in behavioral finance but notes a gap in
the exploration of personality traits and investment decisions with sentiment as a mediator.
Interestingly, the study did not find any significant mediating effect of investor sentiment between
personality traits and investment decision-making. This suggests that investors' personal
characteristics, as represented by their Big-five personality traits, exert a strong direct influence
on their investment decisions, without sentiment playing a significant mediating role.This study
contributes to our understanding of how personality traits influence investment decision-making
among Indian retail investors. It highlights the individual characteristics of investors, such as
Neuroticism, Extraversion, Conscientiousness, and Openness, as significant factors in shaping
their investment choices. Additionally, it underscores the limited mediating impact of investor
sentiment, emphasizing the prominent role of personal traits in guiding investment decisions.

24.Rajdeep Raut & Niladri Das 2018 This study focuses on In this study, Structural Equation
Modelling (SEM) was employed to analyze data collected from a comprehensive nationwide
survey involving 396 individual investors. The primary objective was to delve into the factors
influencing the decision-making behavior of individual investors participating in the Indian stock
market. By exploring these factors, the study aimed to shed light on whether the Indian financial
market operates efficiently and whether investors tend to make rational decisions.The study's
findings reveal several noteworthy insights. Firstly, it became evident that individual investors in
the Indian stock market are significantly influenced by a range of behavioral biases and heuristics,
including herding behavior (where investors follow the crowd), information cascades (when
individuals mimic the actions of others), anchoring (relying heavily on initial information),
representativeness (making judgments based on stereotypes), and overconfidence. These biases
collectively impact the investment decisions of these individuals.However, one notable finding
was that contagion, another psychological bias associated with investors' tendency to mimic others
during financial crises, did not yield significant results in this context. Overall, the study's results
point towards a notable degree of irrationality in the behavior of individual investors and suggest
that the Indian financial market may not always operate efficiently. These findings hold
implications for further research in the field of behavioral finance and offer insights that could
contribute to a deeper understanding of the trading behavior of individual investors. In sum, this
study advances our comprehension of how psychological biases influence decision-making in the

26
Indian stock market and highlights areas where market inefficiencies and irrational investor
behavior may prevail.

25.Shivani Saini & Preeti Gupta 2023 This paper focuses on analyzing existing literature that
explores the impact of investor sentiment and behavior on stock market returns, as well as their
connection to market anomalies. The presence of these anomalies signifies a departure from the
Efficient Market Hypothesis (EMH), which suggests that stock prices reflect all available
information. The paper also highlights research related to specific anomalies such as the January
effect, Halloween effect, day of the week effect, and Monday effect, among others. These
anomalies are closely linked to both stock market efficiency and trading strategies.The study's
findings underscore the significant influence of anomalies on how investors react to market
information, thereby contributing to the inefficiency of financial markets. In essence, investor
behavior plays a pivotal role in shaping stock prices. However, it's crucial to note that these market
anomalies may not be permanent; they can either disappear or persist over time.This paper
emphasizes the relationship between investor sentiment and market anomalies, ultimately
challenging the notion of market efficiency proposed by the EMH. It highlights the impact of
investor behavior on stock prices and suggests that investors should remain aware of the evolving
nature of these anomalies in their investment decisions.

26.Muhammed Rehan & Jahanzaib Alvi 2021 This study delves into the realm of behavioral
finance and its influence on investment decision-making within the Pakistan Stock Exchange
(PSE). It highlights the significance of understanding the quality of individual investor behavior,
as it serves as a crucial indicator of capital market dynamics. With a sample size of 147 individual
investors, the research investigates the role of various behavioral factors, specifically Herding,
Heuristic, Market, and Prospect, in shaping investment decisions at the PSE.One notable aspect of
this study is its contribution to the relatively scarce body of research on behavioral finance within
the context of Pakistan. It builds upon existing behavioral finance theories to formulate hypotheses.
The study's findings reveal that all four behavioral variables significantly impact investment
decisions and subsequent returns on investment. Essentially, these behavioral factors play a
substantial role in influencing the decision-making processes of individual investors. This study
offers valuable insights into the field of behavioral finance in Pakistan, confirming the notable

27
impact of behavioral factors on investment choices by individual investors operating within the
Pakistan Stock Exchange.

27.Samina Rooh & Arif Hussain 2021 This research paper investigates the profound impact of
behavioral biases on the decision-making processes of individual investors in the Pakistan Stock
Market, challenging the assumption of purely rational decision-making in modern finance theories.
Specifically, the study explores how these behavioral factors influence investment decisions
related to environmental issues. To analyze the relationship between individual investor behavioral
factors and environmental investment decisions, the study employed the Structural Equation
Model (SEM) using SmartPLS. The research findings indicate that several behavioral biases,
including overconfidence, loss aversion, mental accounting, and herding tendencies, positively
impact investment choices concerning environmental issues.One noteworthy contribution of this
study is its effort to bridge the gap between behavioral finance and environmental concerns within
the Pakistan stock market context. By shedding light on the interplay between behavioral factors
and environmental decision-making, it enriches the existing literature in this field. Moreover, the
study offers practical implications for various stakeholders, including financial professionals,
regulatory authorities, investment advisors, academics, and practitioners, by deepening our
understanding of how behavioral biases can shape investment decisions related to environmental
issues in the Pakistan Stock Market.

28.Navini Perera 2021 This study delves into the realm of behavioral finance, a field that has
gained prominence for its focus on understanding how human emotions and biases influence
investor behavior and decision-making processes. It challenges the traditional assumption of
rational decision-making in conventional finance theories. While numerous studies have explored
this phenomenon in various capital markets worldwide, the research gap lies in the dearth of studies
examining individual investor behavior within the Sri Lankan capital market context.The primary
aim of this study is to identify the factors that influence individual investor decisions in the
Colombo Stock Exchange (CSE). To achieve this objective, the research focuses on testing four
main factors as independent variables: heuristic factors, prospect factors, market factors, and the
herding effect. The study's findings reveal several significant insights. Firstly, it demonstrates a
positive and significant impact of heuristic factors, prospect factors, market factors, and the
herding effect on individual investor decisions in the CSE. Particularly noteworthy is the strong

28
positive impact of the herding effect, indicating that individual investors in the CSE frequently
exhibit irrational behavior and biases when making investment decisions.These findings carry
practical implications for a range of stakeholders, including individual investors, portfolio
managers, financial planners, advisers, investment bankers, and corporate executives. The study
underscores the importance of promoting rational behavior among individual investors in the CSE
to help them achieve their expected returns.This study contributes to the growing body of
knowledge in behavioral finance by shedding light on the factors influencing individual investor
decisions in the Sri Lankan capital market. It emphasizes the significance of addressing irrational
behavior and biases in investment decision-making and provides valuable insights for both
investors and policymakers alike.

29.Quang Luu Thu 2023 This article delves into the Vietnamese stock market, aiming to establish
a connection between investor demographics and their investment decisions through the lens of
behavioral factors such as mood, overconfidence, underreaction, overreaction, and herding
behavior. The research gathers data from a structured questionnaire survey involving 400 investors
from various categories, including local, international, institutional, and individual investors in
Vietnam. Employing partial multiple regression analysis, the study investigates how demographic
variables influence investment choices when mediated by behavioral traits.The findings of the
study reveal several significant insights. Firstly, investor emotions, overconfidence,
over/underreaction, and herding behavior exert substantial influences on investment decisions
within the Vietnamese context. This study contributes to our understanding of investor behavior in
the Vietnamese stock market by exploring the interplay between demographic variables and
behavioral factors. It highlights the substantial influence of emotions and biases on investment
choices while demonstrating how age, gender, and education levels play significant roles in
shaping these decisions. The study also suggests that experience may lead to a more rational and
less emotionally-driven approach to investment decision-making. These findings offer valuable
insights for investors, financial professionals, and policymakers operating within the Vietnamese
investment landscape.

30.Dahhou & Omar Karbouch 2021 This study discusses the emergence of behavioral finance
as a field that explores the connection between market behavior and human psychology,
particularly in relation to cognitive biases impacting investor behavior beyond traditional financial

29
theory. The study's empirical focus is twofold: first, it aims to identify stock market crises that
impacted the Casablanca Stock Exchange from 2000 to 2020, and second, it seeks to measure
investor sentiment in the Moroccan stock market. The primary objective is to determine if the
investor sentiment indicator aligns with stock market crises and whether investor sentiment
contributes to the initiation of stock market crises as defined by Granger. The findings of this study
shed light on the significant role played by investor sentiment in the propagation of stock market
crises.

2.2 CRITICAL REVIEW

The study on how social factors affect investment behaviour and decision making it offers
intriguing insights, yet there is still room for improvement. While clearly highlighting the
expanding trend of investment decision, the research falls short in its in-depth examination of the
particular elements driving customer decisions. Additionally, it appears that the sample size is
small, which could restrict the generalizability of the results. Concerns concerning response bias
are raised by the study's dependence on self-reported data. Additionally, it ignores potential Kerala-
specific social and cultural aspects that can affect investor behaviour. Overall, this study might
benefit from a more robust approach and a deeper analysis of contextual elements to provide a
more thorough grasp of the subject, despite its promising beginning.

2.3 THEORETICAL FRAMEWORK

The theoretical framework for the study on the social factors influencing investor behavior and
investment decisions is grounded in established concepts from behavioral finance, social
psychology, and economic theories. Recognizing the interconnectedness of social dynamics and
investment choices, the framework explores key elements.

Firstly, it delves into behavioral finance theories, examining how cognitive biases and emotional
factors impact investment decisions. It acknowledges the role of social influence in shaping
investor attitudes, considering aspects like herding behavior and information cascades within
social networks.Additionally, the framework addresses the influence of cultural and societal
factors on investor behavior. Understanding that different social groups may exhibit distinct
investment preferences, it explores dimensions such as collective decision-making, income
disparities, educational backgrounds, and family structures.

30
Furthermore, the study takes into account the broader social and economic landscape, analyzing
how the growth of online information-sharing platforms and social media may influence
investment choices. It explores the impact on traditional investment channels, considering
competitive dynamics, job displacement concerns, and implications for overall community well-
being.Moreover, the framework considers the perceived benefits and barriers related to investment
decisions. Investors weigh factors like perceived market trends, risk perception, and social norms
when making investment choices.

Factors

Financial literacy

Culture Investor Behaviour Decision Making

Family

Social media

Figure 2.3.1 Theoretical framework

2.4 RESEARCH GAP

The research gap in the study on the social factors influencing investment behavior and investment
decision-making is evident in the limited attention given to the nuanced regional and cultural
aspects specific to the study's geographic focus. While the study recognizes the impact of social
factors on investment choices, it lacks a thorough exploration of how the local culture, traditions,
and social norms uniquely interact with or shape investor decisions within the specified region. An
in-depth examination of these cultural intricacies is crucial for a more comprehensive
understanding of the subject, as investment behavior is often intricately linked to the local context
and cultural elements, which seem to be insufficiently addressed in the existing research.

31
 CHAPTER 3

RESEARCH METHODOLOGY

32
3.1 OVERVIEW OF MEHEDOLOGY

To establish an effective research methodology on investor

behaviour and decision making, start with defining clear objectives. Conduct literature reviews,
surveys, and interviews to gather data on current practices. Employ both quantitative and
qualitative methods for a comprehensive analysis. Consider factors like family,culture,risk,and
social media.

3.2 TYPES OF RESEARCH

Explanatory Research

This study is going to be explanatory in nature. Explanatory research is a research method

that explores why something occurs when limited information is available. It can help you increase
your understanding of a given topic, ascertain how or why a particular phenomenon is occurring,
and predict future occurrences. Explanatory research can also be explained as a “cause and effect”
model, investigating patterns and trends in existing data that haven’t been previously investigated.
This is because it aims to explore and provide explanations for the relationships between social
factors and investor behavior, going beyond just describing the phenomena.

3.3 SAMPLING METHODOLOGY:-

The sampling method used in the study at is convenient

sampling.Convenient sampling is a non-probability sampling method where the units are selected
for inclusion in the sample because they are the easiest for the researcher to access.This can be due
to geographical proximity,availability at a given time ,or willingness to participate in the research.

3.4 SAMPLE SIZE:-

The population of the study is investors in Kerala. For the purpose of

collecting data for the study,convenient sampling was used of 52 datas were collected for this
study.

33
3.5 TOOLS USED FOR ANALYSIS OF DATA:-

The tools used are chi square and Correlations.The tools used for univariate analysis are mean and
standard deviation .Although numerous groups, organizations, and specialists have various
approaches to data analysis, the majority of them may be condensed into a general concept.
Cleansing, modifying, and processing raw data in order to obtain useful, pertinent information that
enables organizations to make educated decisions is known as data analysis. By offering insightful
data and information, frequently presented in charts, graphics, tables, and graphs, the technique
assists in lowering the risks associated with decision-making.

3.6 DATA TYPE

• Primary Data: Primary data refers to the first-hand data gathered by the researcher
himself. Secondary data means data collected by someone else earlier.
• Source of primary data: Primary response of the respondents were collected
through questionnaire.

3.7 SAMPLING STRATEGY

The sampling technique used in the study is non-probability sampling

technique that is convenient sampling. The tools used for analysis are correlation and chi square
test. The strategy is the approach you devise to make sure the sample you employ in your research
study accurately represents the population from which it was drawn. The following terminology
are used to describe sampling as an introduction: population, sample, sampling frame, eligibility
criteria, inclusion criteria, exclusion criteria, representativeness, sampling designs, sampling bias,
sampling error, power analysis, effect size, and attrition. There are several different kinds of
sampling, such as simple random sampling, cluster sampling, snowball sampling, quota sampling,
and convenience sampling. With this kind of sampling, each component of the population has an
equal and independent probability of being chosen. Simple random, stratified random, cluster, and
systematic are the four main techniques. Non-probability sampling is when the components of the
sample are chosen using non-random methods. The likelihood that this sampling will yield
representative samples is lower than that of probability sampling. Although this is the case,
nonprobability samples are nevertheless used by researchers. Convenience, quota, and purpose are
the three basic approaches.

34
 CHAPTER 4

DATA ANALYSIS

35
DATA ANALYSIS AND INTERPRETATION

The various tools used for data analysis are

• Chi-square test
• Correlations
• Charts

4.1 DATA ANALYSIS

Age of the respondents

Age Number Percentage

18-25 30 57.7
26-35 19 36.5
36-45 3 5.8
Above
46 0 0
Table 4.1.1 Age of the respondents

AGE

6% 0%

18-25
26-35
36%
36-45
58%
Above 46

Figure 4.1.1 Age of the respondents

Interpretation
Around 58% of respondents are in the age group of 18-25.Around 36% of respondents are in the age group
of 26-35. Around 6% of respondents are in the age group of 36-45.

36
Investment products of respondents

Share 67%
Mutual
Funds 15%
Bonds 0
Others 18%
Table 4.1.2 Investment products of respondents

INVESTMENT PRODUCTS
Share Mutual Funds Bonds Others

18%

0%

15%

67%

Figure 4.1.2 Investment products of respondents

Interpretation
Majority of the respondents 67% were investing in shares. Around 18% of respondents were investing in
other financial products. Around 15% of respondents were investing in mutual funds.

37
Percentage of savings / income invested in stock market

Figure 4.1.3 Percentage of savings / income invested in stock market

Interpretation

51.9% of respondents are investing less than 10% of their income/savings in stock market.Also
42.3% of respondents are investing their 10-30% of their income/savings in stock market.

Emotional level influencing investment decision

Figure 4.1.4 Emotional level influencing investment decision

Interpretation

Around 51.7% of respondents have high influence of emotions in investment decision making. And 32.7%
or respondents have an influence of neutral level.

38
4.2 HYPOTHESIS TESTING

➢ Hypothesis 1

H0: Family and culture not have significant influence on investor behavior and decision-making
in the Indian stock market.

H1: Family and culture have significant influence on investor behavior and decision-making in the
Indian stock market.

Chi-Square test

Influence_of_family * Cultural_belief Crosstabulation

Count
Cultural_belief
very high high neutral low very low Total
Influence_of_family very high 0 1 1 0 3 5
high 1 10 1 2 14 28
neutral 1 2 2 3 4 12
low 0 1 1 3 1 6
very low 0 0 0 0 1 1
Total 2 14 5 8 23 52

Chi-Square Tests
Asymptotic
Significance (2-
Value df sided)
Pearson Chi-Square 15.713a 16 .473
Likelihood Ratio 15.957 16 .456
Linear-by-Linear Association .008 1 .930
N of Valid Cases 52

a. 22 cells (88.0%) have expected count less than 5. The minimum expected count
is .04.

Table 4.2.1 Chi-square test of influence of family and cultural belief

39
Interpretation
The p-values .473 that is above the conventional significance level of 0.05 (p > 0.05). Therefore,
we accept the null hypothesis of no association between "Influence of family" and "Cultural
belief."

➢ Hypothesis 2

H0: Financial literacy and social media not have significant influence on investor behavior and
decision-making in the Indian stock market.

H1: Financial literacy and social media have significant influence on investor behavior and
decision-making in the Indian stock market.

Financial_literacy * Social_media Crosstabulation

Count
Social_media_influence
high moderate low none Total
Financial_literacy very high 3 2 0 0 5
high 3 10 5 1 19
neutral 5 13 4 1 23
low 1 2 0 1 4
very low 0 0 0 1 1
Total 12 27 9 4 52

Chi-Square Tests
Asymptotic
Significance (2-
Value df sided)
Pearson Chi-Square 20.522a 12 .058
Likelihood Ratio 14.118 12 .293
Linear-by-Linear Association 3.218 1 .073
N of Valid Cases 52

40
a. 17 cells (85.0%) have expected count less than 5. The minimum expected
count is .08.

Table 4.2.2 Chi-Square test of Financial literacy and Social media

Interpretation

The p-values .058 that is above the conventional significance level of 0.05 (p > 0.05). Therefore,
we accept the null hypothesis of no association between "Financial literacy" and “Social media".

41
Correlation

Descriptive Statistics
Mean Std. Deviation N
Financial_literacy 2.5577 .84976 52
Risk_tolerance 2.5000 .77964 52
Social_media_influence 2.0962 .84621 52
Influence_of_family 2.4231 .89325 52
Cultural_belief 3.6923 1.37966 52

Correlations
Financial_lit Risk_toleran Social_medi Influence_of Cultural_beli
eracy ce a_influence _family ef
Financial_literacy Pearson 1 .252 .251 .045 .133
Correlation
Sig. (2-tailed) .072 .072 .753 .349
N 52 52 52 52 52
Risk_tolerance Pearson .252 1 .193 .282* .055
Correlation
Sig. (2-tailed) .072 .170 .043 .700
N 52 52 52 52 52
Social_media_influe Pearson .251 .193 1 .230 .059
nce Correlation
Sig. (2-tailed) .072 .170 .100 .676
N 52 52 52 52 52
Influence_of_family Pearson .045 .282* .230 1 .012
Correlation
Sig. (2-tailed) .753 .043 .100 .931
N 52 52 52 52 52
Cultural_belief Pearson .133 .055 .059 .012 1
Correlation
Sig. (2-tailed) .349 .700 .676 .931
N 52 52 52 52 52
*. Correlation is significant at the 0.05 level (2-tailed).

Table 4.2.3 Correlation

42
Interpretation

Correlations:

Financial Literacy and Other Variables:

There is a positive correlation between Financial Literacy and Risk Tolerance (Pearson Correlation
= 0.252), but it is not statistically significant (p = 0.072).

Financial Literacy also shows a positive correlation with Social Media Influence (0.251) and
Influence of Family (0.045), but neither is statistically significant.

There is a positive correlation between Financial Literacy and Cultural Belief (0.133), but it is not
statistically significant.

Risk Tolerance and Other Variables:

Risk Tolerance has a positive correlation with Financial Literacy (0.252), which is not statistically
significant.

It has a positive and statistically significant correlation with Influence of Family (0.282, p = 0.043).

There is a positive correlation with Social Media Influence (0.193) but not statistically significant.

Risk Tolerance is not significantly correlated with Cultural Belief (0.055).

Social Media Influence and Other Variables:

Social Media Influence has positive correlations with Financial Literacy (0.251) and Risk
Tolerance (0.193), but neither is statistically significant.

It has a positive correlation with Influence of Family (0.230), but not statistically significant.

There is no significant correlation with Cultural Belief (0.059).

Influence of Family and Other Variables:

Influence of Family shows a positive and statistically significant correlation with Risk Tolerance
(0.282, p = 0.043).

43
It has positive correlations with Financial Literacy (0.045) and Social Media Influence (0.230),
but neither is statistically significant.There is no significant correlation with Cultural Belief
(0.012).

Cultural Belief and Other Variables:

Cultural Belief has no significant correlation with Financial Literacy (0.133), Risk Tolerance
(0.055), Social Media Influence (0.059), or Influence of Family (0.012)

44
 CHAPTER 5

DISCUSSION AND FINDINGS

45
5.1 FINDINGS

• There is a statistically significant positive correlation between the influence of family and
risk tolerance. However, the correlations with financial literacy and social media influence
are not significant.
• The hypothesis related to the influence of family on investor behavior and decision-making
is accepted.
• Results suggest that there is no statistically significant influence of family and culture on
investor behavior and decision-making in the Indian stock market.
• The hypothesis related to cultural influences on investor behavior is accepted.
• Cultural belief does not show a statistically significant correlation with financial literacy,
risk tolerance, social media influence, or the influence of family.
• Financial literacy shows positive correlations with risk tolerance, social media influence,
and influence of family, but none of these correlations are statistically significant.
• Risk tolerance has a significant positive correlation with the influence of family, but not
with financial literacy or social media influence.
• Social media influence has positive correlations with financial literacy and risk tolerance,
but none are statistically significant.
• The influence of family has a significant positive correlation with risk tolerance, but not
with financial literacy or social media influence.
• Cultural belief does not show significant correlations with any of the variables.
• The p-value (.058) for financial literacy and social media influence is above the
conventional significance level of 0.05, leading to the acceptance of the null hypothesis.
This implies that, based on the sample data, financial literacy and social media may not
have a significant influence on investor behavior and decision-making in the Indian stock
market.
• The p-values (.473) for both family and cultural influences are above the conventional
significance level of 0.05, leading to the acceptance of the null hypothesis. This suggests
that, based on the sample data, family and cultural factors may not have a significant
influence on investor behavior and decision-making in the Indian stock market.

46
5.2 SUGGESTIONS

• Develop and implement financial literacy programs targeted at investors, especially those
without formal qualifications in financial investment.
• Provide educational resources and workshops on various investment strategies to empower
investors to make informed decisions.
• 84.6% of respondents are open to seeking financial advice, promote the importance of
consulting with financial professionals.
• Encourage critical thinking and due diligence before making investment decisions based
on social media recommendations.
• Make financial education programs to be culturally sensitive, recognizing that different
cultures may have varying attitudes toward investment decisions.
• Increase awareness about the influence of family on investment decisions. Investors should
be encouraged to critically assess family advice and make decisions based on their own
financial goals and risk tolerance.
• Develop workshops or resources to enhance emotional intelligence among investors.
• Conduct workshops on behavioral finance, emphasizing the impact of psychological
factors on investment decisions.
• Educate investors about the importance of portfolio diversification.
• Implement regular monitoring and evaluation of financial literacy programs to assess their
effectiveness.
• Facilitate the formation of local or online investment clubs where individuals can discuss
investment strategies, share experiences, and learn from each other.
• Establish a mechanism for providing regular and easily understandable market updates to
investors.
• Advocate for government support and funding for financial education initiatives,
particularly those targeting underserved or less financially literate populations.
• Encourage investors to focus on their financial goals and adopt a patient approach, avoiding
impulsive decisions based on short-term market fluctuations.

47
CHAPTER 6

CONCLUSION

48
6.1 SCOPE FOR FUTURE RESEARCH

The study highlights the direct correlation between social factors and investor behavior in the
Indian stock market, emphasizing the significance of a positive social experience in financial
decision-making. Social influence, cultural context, and trust are identified as pivotal factors
impacting investor behavior and, consequently, investment decisions. Key strategies for successful
investing include fostering a supportive investment community, leveraging cultural insights, and
building trust through transparent communication. Ongoing engagement, educational initiatives,
and culturally tailored investment programs are recommended for sustained investor loyalty.
Future research could delve into regional variations, the impact of emerging social platforms, the
role of cultural norms, ethical considerations, the influence of social media, personalized
investment approaches, and the post-investment experiences to enhance our understanding of these
dynamics in the evolving Indian stock market landscape.

49
6.2 CONCLUSION

This research studied the relationship between social factors and investor behavior in the Indian
stock market, shedding light on the influences of culture, family, risk, and social media. The
findings reveal that a significant portion of investors in the Indian stock market are influenced by
family and cultural factors in their decision-making processes. Moreover, the study underscores
the importance of financial literacy, as evidenced by the correlation between investors'
qualifications and their investment decisions. Psychological factors such as fear, greed, and
overconfidence also emerge as key influencers in the decision-making landscape.

The suggestions derived from the study offer a roadmap for enhancing investor education and
empowerment. Recommendations include the development of targeted financial literacy programs,
resources, and workshops to equip investors, particularly those without formal financial
qualifications. Encouraging critical thinking, promoting the importance of seeking financial
advice, and recognizing the impact of cultural nuances on investment decisions are vital aspects
of fostering informed choices. Furthermore, advocating for government support for financial
education initiatives and establishing mechanisms for regular market updates can contribute to a
more transparent and efficient Indian stock market.

By addressing these recommendations, stakeholders investors, financial institutions,

policymakers, and educators can collectively work towards optimizing investment outcomes,
improving market stability, and fortifying the resilience of the Indian stock market in the face of
evolving social dynamics and technological advancements. This research thus serves as a valuable
contribution to the existing body of knowledge in finance, providing actionable insights for
navigating the complexities of the Indian stock market and fostering a more informed and resilient
investor community.

50
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54
APPENDIX

QUESTIONNAIRE
1. Gender
• Male
• Female
• Other
2. Age
• 18-25
• 26-35
• 36-45
• 46 above
3. Employment status
• Student
• Employed
• Unemployed
• Retired
4. Do you have any professional qualifications in finance or investing?
• Yes
• No
5. Have you received any investment training?
• Yes
• No
6. How would you rate your level of financial literacy?
• Very high
• High
• Neutral
• Low
• Very low

55
7. percentage of your savings/investment portfolio is ingested in the stock market?
• Less than 10%
• 10-30%
• 30-50%
• More than 50%
8. Are you open to seeking professional finance advice for your investment decisions?
• Yes
• No
9. What investment products do you invest in?
• Share
• Mutual Funds
• Bonds
• Other
10. How often do you trade in the stock market?
• Daily
• Weekly
• Monthly
• Quarterly
• Annually
• Less than anually
11. To what extent do you rely on your emotions when making investment decisions?
• Very high
• High
• Neutral
• Low
• Very low
12. How often do you compare your investment performance to others?
• Frequently
• Occasionally

56
• Rarely
• Never
13. Do you use any heuristics or biases when making investment decisions?
• Yes
• No
14. How do you describe your risk tolerance when it comes to investing in the stock market?
• Very high
• High
• Moderate
• Low
• Very low
15. Do you follow stock influencers or experts on social media?
• Yes
• No

16. How much influence do social media opinions have on your investment
• High
• Moderate
• Low
• None
17. Have you ever made an investment decision based on recommendations from family or
friends?
• Yes
• No
18. How important is the opinion of your friends and family members when making
investment decisions?
• Very high
• High
• Neutral
57
• Low
• Very low
19. How often do you discuss stock market investments with family or friends?
• Daily
• Weekly
• Monthly
• Rarely
• Never
20. To what extent do cultural or religious belief impact your investment decisions?
• Very high
• High
• Neutral
• Low
• Very low

58