Misguided By Market Noise: An Analysis of Triggers Behind Irrational Investment Behaviour Among Retail Investors in Western Mumbai.

Abstract

The retail investors in Western Mumbai have experienced a significant change in their investment behavior due to the fast growth of digital trading platforms and social media. This paper discusses the role of market noise, financial literacy, the impact of social media, and behavioral biases on investment choices among retail investors. The study deploys a quantitative research design and survey data gathered on 150 investors to conduct descriptive analysis and chi-square testing to test relationships between the key variables. The results indicate that there is a high percentage of investors who base their investment decision-making on informal channels that include influencers, peers, and online platforms, without proper verification. It has been found that market noise, which is marked by misinformation, overabundant, unreliable data has a strong influence on the behavior of investors, causing impulsive actions and speculative trading patterns. The level of financial literacy is also seen to be moderate, but not high enough to overcome the impact of deceptive information and emotional bias. Fear of missing out (FOMO), herd behavior, and overconfidence are also examples of behavioral tendencies that misrepresent rational decision-making. The statistical outcomes confirm that the four factors, including market noise, financial literacy, social media, and behavioral biases, play an important role in investment decisions. The paper brings out the susceptibility of comparatively new and young investors to irrational behavior. It highlights the necessity of better financial education, a more rigorous control of digital financial information, and access to more reliable information. On the whole, the study highlights the need to promote informed and disciplined investment conduct in a more digital age of finance.