Behavioural finance explores the intersection of psychology and economics to understand why investors often make irrational financial decisions. In the Indian context, cultural and socio-economic factors further shape investor’s buying behaviour, influencing their decision-making processes. This study aims to identify key behavioural biases among Indian investors, analyse real-life cases where these biases have led to suboptimal financial outcomes, and provide recommendations to enhance decision-making.

Using a survey of 500 Indian investors across diverse demographics, this research examines prevalent biases such as overconfidence, herd behaviour, loss aversion, and anchoring. Findings reveal that a significant proportion of investors exhibit these biases, leading to decisions influenced by emotions rather than rational analysis. Case studies, including the Paytm IPO, demonetization, and the Harshad Mehta scam, illustrate how these biases manifest in real-life financial scenarios.

The study highlights the need for financial literacy initiatives and behavioural tools to help investors recognize and mitigate cognitive biases. By addressing these psychological tendencies, Indian investors can make more informed and rational financial choices. Future research could explore longitudinal trends in investor behaviour to assess the evolving impact of behavioural biases over time