A STUDY ON RETAIL INVESTORS’ INVESTMENT PREFERENCES IN EQUITY MARKETS AND THE DETERMINANTS OF THEIR DECISION-MAKING

Abstract

Retail investors play a significant role in the development and efficiency of capital markets, particularly in emerging economies where participation in equity investments is steadily increasing. This study aims to analyze the preferences of retail investors toward equity investments and to identify the key factors influencing their investment decision-making process. Retail investors typically invest their personal savings in financial instruments such as stocks, mutual funds, and other market-linked securities with the objective of wealth creation and capital appreciation. However, their investment decisions are influenced by a combination of financial, demographic, psychological, and market-related factors. The research examines how factors such as expected returns, risk perception, market information, financial literacy, and company performance influence the investment choices of retail investors. Demographic characteristics—including age, income level, education, and occupation—also play a significant role in shaping investment behavior and preferences. In addition, behavioral aspects such as investor sentiment, psychological biases, and social influence may affect the rationality of investment decisions, as suggested by behavioral finance theories. The study adopts a descriptive research design and relies on both primary and secondary data sources. Primary data may be collected through structured questionnaires distributed among retail investors to assess their awareness, risk tolerance, and investment patterns in the equity market. Statistical tools and analytical techniques are applied to interpret the collected data and identify the most influential factors affecting decision-making.