INDIVIDUAL INVESTOR’S SENTIMENT AND ITS IMPACT ON PAKISTANI STOCK MARKET TREADING PERFORMANCE: A QUALITATIVE STUDY DESIGN

Abstract

Purpose – This research purpose is to examine the influence of individual investor sentiment on the trading performance of the Pakistan stock market, discovering how psychological biases, sentiments, and market insights impact the decision-making of investments and outcomes. Design/methodology – This research has used a qualitative research method and the 21 participants’ data has been collected through structured interviews. The thematic analysis tool has been used for data analysis.  Findings – The study emphasizes the significant influence of behavioral factors like overconfidence, loss aversion, and herding behavior on individual investor’s trading performance at the Stock Exchange of Pakistan (PSX). The outcomes demonstrate that the confidence of investors varies with market environments, loss aversion behavior, and herding propensities arise in the uncertainty of the market, while they do not constantly improve performance. Whole, psychological factors play a vital role in determining the behavior of the investor, with their impacts on trading performance fluctuating under Pakistan’s market situations. Research implications–It contributes to the understanding of how these factors form investment decision-making and performance in the vibrant market situation of Pakistan. Originality – This study suggests an original understanding of the behavioral biases affecting the trading performance of individual investors in the Stock market of Pakistan, especially discovering the role of psychological factors that as overconfidence, loss- -aversion, and herding behavior in a developing market environment.