Behavioural Biases and Risk Perception in Retail Investors’ Decisions on Healthcare Stocks: Evidence from Post-Covid-19 India

Abstract

 Retail investors increased their presence in Indian equities after COVID-19 and healthcare stocks drew particular attention because the sector combined defensive demand with a highly visible news flow. This study examines whether overconfidence, herding, loss aversion and availability bias, together with risk perception, are associated with retail decisions on listed healthcare stocks in the post-acute period. Survey data from 412 retail investors in urban and semi-urban India were analyzed with a structural model. Reliability and convergent validity met conventional thresholds. The model explains 41.2 percent of the variance in the healthcare investment decision. Overconfidence (β = 0.214), herding (β = 0.186) and availability bias (β = 0.198) are positively related to that decision. Loss aversion raises the tendency to hold losing positions (β = 0.241) and lowers new buying (β = −0.163). Risk perception reduces the stated healthcare portfolio share (β = −0.227) and partially mediates the paths from loss aversion and availability. Financial literacy is negative but not significant. The paths are stronger for overconfidence and availability among investors who opened demat accounts after March 2020. Healthcare allocations after COVID-19 reflect bias and subjective risk, not only the sector’s defensive reputation. Advisers should separate questions on holding losers from questions on new buying and investor education should use healthcare headlines rather than generic literacy content alone.