Understanding Indian retail investors' stock investment behaviour: an empirical study

Abstract

The study was conducted among adult Indian investors, who capitalise their savings in the stock market. An online and physical form survey was conducted among 394 retail investors across major metros and minimetros in India. The investor group was divided on the basis of their usage pattern into low stock investors (≤ 40% of their savings in stocks) and high stock investors (> 40% in stocks). The two groups were compared with regard to their demographics, trading, investing and monitoring patterns. A significant and robust logit regression model was derived on the basis of demographic variables as well as key decision criteria like liquidity, capital appreciation, higher returns, availability of funds and the opportunity of flexibility and experimentation. The high investor group was older, more educated and had a larger and diverse investment portfolio as compared to the low investor. The high investor group makes more informed and consistent trading at the stock market.

Predictors of investment intention in Indian stock markets

“…After the Establishment of SEBI Act (1992), which established SEBI as the regulator of Indian capital markets, the latter became more important. SEBI took many measures to attract investors to the market, including: reserving 35 per cent of share offerings for individual investors, 5 per cent discount on the share price and one lot to be worth between INR 10,000–15,000, up from INR 5,000–7,000 (Pandit and Yeoh, 2014; Mehta and Sondhi, 2016). In addition, SEBI has been conducting investor awareness programmes to encourage participation at an individual level (Business Standard, 2015).…”

“…In spite of having the highest savings rate in the world, the amount that is invested in equities is 2 per cent whereas, in America, people invest nearly 45 per cent in equities (Nayyar, 2015). Thus, there is a need for more individual investors to participate, to channel money into equities that are a source of capital for corporates (Mehta and Sondhi, 2016).…”