The Impact of Individual Behaviour of Investor on Stock Market of Nepal

Abstract

An investor is a person who allocates capital with the expectation of a financial return. The market involves by definition. One buyer and seller. The stock market includes a very large number of investors, each having their own motives for becoming buyers and sellers. The investors consider their investment needs, goals, objectives and constraints in making investment decision. The main objective of the study was to analyze the individual investors’ behavior in Nepalese Stock market. The study adopted quantitative approach. The stud undertakes descriptive research design. The study used primary data to obtain the objectives of the study.120 structured questionnaire that was developed and was distributed among the investors of stock market through friends circle and relatives. Percentage, correlation, regression and descriptive statistics like mean, standard deviation were used for analysis purpose with the help of SPSS software. Cronbach’s alpha was also used for the reliability and validity. The major conclusion of this study is that most of the investors consider herding, rational decision and information leak as important factor that influence behavior of investors. It is found that most of the investors take rational decision before invest in share. They are gather necessary information before buying and selling share. There is positive relationship between all factors such as herding, information leak and rational decision with investment trading. The study shows investment trading is positively influenced by herding behavior rational decision and information leak but highly influenced by herding behavior. Investors are quite disagree with herding behavior and most of the investors are agree with rational decision. The study has found that respondent investors exhibited herding behavior. Their need to conform with others was one of the influences on their investment trading process.