Influence of Risk Perception on the Relationship Between Psychological and Economic Factors in Indian Stock Market Investments

Tajindra Kaur; Amitabha Maheshwari

Influence of Risk Perception on the Relationship Between Psychological and Economic Factors in Indian Stock Market Investments

Author(s)	Tajindra Kaur, Dr. Amitabha Maheshwari
Country	India
Abstract	Within the context of the Indian stock market, the conduct and choices of investors are influenced by a complex interplay between economic and psychological factors. Significantly influencing the correlation between these characteristics and financial performance is the influence that risk perception has on the relationship between two variables. The purpose of this review research is to investigate the ways in which risk perception acts as a mediator in the interaction between economic factors such as interest rates, market conditions, and financial information and psychological qualities such as risk tolerance and cognitive biases. The psychological characteristics of herd mentality, loss aversion, and overconfidence are among the reasons why investors often make irrational judgments about their investments. This is especially true when they fail to appropriately estimate the dangers that are linked with the market. Similarly, the perceptions and evaluations of risk that investors have an effect on economic variables like as the availability of information and the volatility of the market, which in turn have an effect on the decisions that investors make. For the purpose of illustrating the idiosyncrasies of a rising market, this article provides a case study of the Indian stock market. rising markets are characterized by considerable levels of unpredictability, which are experienced by both individual and institutional investors. As a consequence of this study, which relies on a synthesis of past research to explore how perceptions of risk affect the influence of psychological and economic factors, the primary objective of this work is to enhance investment returns via better risk assessment. It is necessary for legislators, financial planners, and investors to have a solid understanding of these dynamics in order for them to be able to devise plans that appropriately take into account the current economic situation and the psychology of investors.
Keywords	Risk perception, psychological, economic, Indian stock market
Field	Business Administration
Published In	Volume 7, Issue 1, January-February 2026
Published On	2026-02-27

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Influence of Risk Perception on the Relationship Between Psychological and Economic Factors in Indian Stock Market Investments

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