Factors Influencing Investment Decisions in Indian Stock Market based on Representativeness

The paper is based on the investor’s behavior. The behavior is on Heuristic Representativeness of the individual investors. This approach is about ruling and decision making. (Amos Tversky and Daniel Kahneman 1970) Heuristics are easy and are straight forward in nature, they are the thump rule to be followed which helps in making judgment and decision very effectively. This approach tells us about the nature of an individual’s instinctive decision making abilities. We can even observe the spontaneous reaction of the people during stock prediction or market speculation. Based on this theory we have tried to built a model or approach as to how an investor behaviors at various stock market situation. Out of three main elements of Heuristic approach (Tversky and Kahneman) ie. Representativeness, Availability and Anchoring, this paper is only emphasized on representativeness element. Based on this particular element, different factors are drawn like Past experience, their ability of taking risk or bearing risk, precautions taken after loss investments, their market speculation, and prediction ability. In the paper we have consider 107 respondents spread across Hubli Districts, Karnataka State of India. These respondents are working both in government and Private sector. They are majority salaried people. These Respondents have a work experience of 10-15 years in greater number. The education qualification of these respondents was bachelors. To measure the effect of different factors with that of social characteristics of respondent mainly two tools were used that is T Test and One way ANOVA. The effect on these factor were computed by comparing the relation between Gender (Independent )and Investment factor (Dependent) in which all factor had a significant effect by gender as p-value representing all T values is less than 0.05 (p< .05). Likewise comparing the relation between Age (Independent )and Investment factor (Dependent ) in which all factor had a significant effect by age as pvalue representing all F values is less than 0.05 (p< .05). Except one factor that the investor is careful after loss investment were p>0.05 (0.366>0.05 ) which is not significant. The other comparison was between education and investment factor, were all factor were significant. The factor which was not effecting was market predictability by investor were p value of respective F value was greater the 0.05 (0.561>.05) hence this factor was not significant. Likewise comparing the relation between Work Experience (Independent) and Investment factor (Dependent) in which all factor had a significant effect by work experience as p-value representing all F values is less than 0.05 (p< .05). Except two factor that is expert predictors and careful after loss investment were p>0.05 (0.193>0.05 and 0.197>.05) which is not significant. Occupation (Independent) of the investor was considered as another element of comparison with investor’s decision (Dependent). All thefactor were significant effecting the decision were 0.05 (p< .05). But majorly these couldn’t be considered as the p>0.05. Investment with equal chance loss and gain , expert predictors analysis and being careful after loss investment were 0.731>0.05 and 0.466> .05 and 0.2.01>0.05. Likewise comparing the relation between income level (Independent) and Investment factor (Dependent ) in which all factor had a significant effect by income level as p-value representing all F values is less than 0.05 (p< .05). Except one factor that is market prediction were p>0.05 (0.815>0.05) which is not significant