A Study on Stock Selection Behaviour of Individual Investors based on Nifty 50 Holdings

Investment decisions are the result of investment analysis which involves a thorough analysis of information disclosed by companies. Stock investments are more sensitive to information (both quantitative and qualitative). Individual investors’ preference for specific stock over available stocks depends largely on the financial information of a company. Investors attach different levels of importance to each attribute of a stock while selecting stocks for investment. The present study is an attempt to identify the preferred stock attributes of retail investors based on shareholding in Nifty fifty stocks for the quarter ending March 2018. The study is based on secondary data and the data sources include NSE and other stock analysis websites and online research articles. From the analysis, the study found that FMCG is the most preferred sector and retail investors display high preference for low risk, low leverage and high valued stocks. Further, retail investor investment found high in stocks with low promoter holding and high domestic institutional holding. Understanding the stock selection behaviour of individual investors is of high importance to regulators and stock market analysts as it helps them to identify the areas that need to be focused more for increased investment from individual investors that result in stock market development thereby economic growth.