A STUDY ON INVESTORS BEHAVIOUR IN INVESTMENT DECISION MAKING TOWARDS CAPITAL MARKETS w r t SELECT CITIES OF ANDHRA PRADESH

Abstract

This study explored the behaviour of individual investors in the capital markets of Vijayawada, Visakhapatnam, and Tirupati. With increasing retail participation in India s financial markets, the research examined how behavioural biases, demographic factors, and service satisfaction influenced investment decisions, particularly in stocks and derivatives. newlineDespite numerous investment avenues, most investors preferred derivatives and equities due to their high return potential, despite accompanying risks. The research focused on five key objectives: analyzing behavioural biases, their link with demographics, investor satisfaction with stockbrokers, challenges in derivatives trading, and how these challenges influenced investor decisions. newlineData were collected from 465 active investors using purposive and snowball sampling. Statistical tools such as Chi-square, ANOVA, t-tests, factor analysis, and regression were employed for analysis. Derivatives were the most preferred investment option, followed by equities, IPOs, and mutual funds. Factor analysis revealed six key behavioural dimensions Excessive Optimism, Directional Trading, Uniformity, Functional Fixedness, Risk Seeking, and Community Forums that significantly influenced decisions. newlineDemographic insights showed that younger, moderately experienced investors were more prone to overconfidence, while highly educated investors relied more on algorithm-based strategies. Many investors expressed dissatisfaction with broker services, particularly due to platform glitches, high charges, and lack of educational support. newlineThe study found that behavioural biases often led to impulsive and emotional trading, which adversely impacted outcomes. Conversely, disciplined investors who reviewed and learned from past trades tended to perform better. Key recommendations included avoiding expiry-day option trades, using multiple trading platforms, starting with small lots, and setting clear stop-losses. newline