RETAIL INVESTOR’S ATTITUDE AND PERCEPTION ON STOCK SELECTION DECISION: AN EMPIRICAL ANALYSIS

Abstract

The globalization of financial markets provides a wide variety of market and investment options which increased the number of retail investors’ in India. The research in Behavioral Finance is comparatively less in India, when compared to other foreign countries. The Stock Selection Process is considered very important in Behavioural Finance. Hence this paper aims at identifying the factors, influencing the stock selection decision including demographic factors. This study follows a qualitative methodology to investigate retail investor’s behaviour in choosing stock in Guwahati Stock Exchange. The purpose of this study is to examine the role of various socio-economic, demographic and attitudinal factors affecting the investment decision of investors in the market. The researcher collected primary data from 100 retail investors living in Assam and linked with Guwahati Stock Exchange during the period between June and July, 2011 through a Structured Questionnaire. The analysis reveals that the average value of the top five highly influential factors were Media coverage of the stock, Social Responsibility of the Company, Familiarity with products and services and Sensitivity of Sales in particular Industry. According to sample retail investors, there are four factors with the lowest priority or which had low influence on the Stock Selection Decision viz. Size of the Company, Recommendation of friend, family and peer, Market share of the top few firms in the Industry, expected stock split.