Do Market and Herding Effect Really Impact on Investment Decision Making in the Indian Share Market?

Abstract

“Mad March – 2020, witnessed dramatic down-slide in the world’s top stock exchanges due to COVID-19 pandemic with worrying volatility which resulted in traders panic sold off their holdings out of fear”.2020’s first quarter witnessed substantial losses in the several well-recognized stock indices, especially between March 6 to 18, more than 20% that were triggered downward by the outbreak of COVID-19. Dow Jones Industrial Average and S&P 500 experienced the worst first quarter ever in the history during the year 2020 reducing its value by 23.2%. The year 2020 witnessed several historical landmark changes in the Indian share market movements along with other prominent stock exchanges of the globe. On March 23rd, 2020, Benchmark index SENSEX touched intraday lowest value of 25880 and NIFTY fell to the lowest value of 7583. Throughout the globe, including Indian investors, started to rush for clearing their holdings ahead of dark lines created by the pandemic in spite of most of the financial analysts’ suggestion for fresh buy and/or to hold previous purchase for long. Supporting financial experts’ views, within the next nine months SENSEX has gained around 100% and stood at 48834.34 on 8th Jan 2021.
 There are many studies both in India and outside the country that have provided evidence for the role of behavioral factors on investment decision-making at respective stock markets. Here authors attempted to verify, ‘weather market factor and herding effect of behavioral variables do influences on investment decision making of Indian share market investors?’