Market Volatility And Retail Investor Behaviour: Evidence From The Indian Equity Market Using Behavioural Finance Perspectives

Volatility in financial markets has become a defining feature of modern investing, particularly in emerging economies like India where retail participation is steadily increasing.Frequent market fluctuations often create uncertainty, influencing how individual investors perceive risk and make investment decisions.In such conditions, behavioural biases tend to play a significant role, leading investors away from purely rational decision-making.The present study examines the impact of market volatility on retail investor behaviour in the Indian equity market, drawing insights from behavioural finance theory.It specifically investigates the influence of psychological factors such as overconfidence, herding behaviour, and loss aversion during periods of market instability.The study is based on primary data collected from 150 retail investors using a structured questionnaire.Statistical techniques, including correlation and regression analysis, were applied using SPSS to assess the relationships among variables.The results reveal that market volatility significantly affects investor behaviour, with many investors exhibiting emotionally driven responses such as panic selling and trendfollowing.Behavioural biases, particularly loss aversion and herding tendencies, were found to strongly influence investment choices.The study concludes that enhancing financial awareness and behavioural understanding among investors is essential for promoting rational decision-making and improving market stability.