A Study on the Influence of Emotion on the Investment Decision and Performance of Investors in Chhattisgarh

This study examines how discrete emotional states shape investment behaviour among retail investors in Chhattisgarh, India, within a behavioural finance framework. Moving beyond aggregate affect, it analyses the influence of happiness, hope, anger, sadness, and fear on risk perception, portfolio allocation, and self-reported performance. Using a cross-sectional survey of 165 investors, primary data were collected through structured Likert-scale instruments. Reliability was confirmed via Cronbach’s alpha. Due to non-normal data, non-parametric methods (Friedman and Wilcoxon signed-rank tests) assessed differences in emotional intensities, while Pearson and Spearman correlations estimated relationships between emotional and investment variables. Findings reveal significant variation across emotions, with anger and fear showing higher intensities. Such emotions have a positive correlation with conservative attitudes towards investments, consistent with the theory of loss aversion and affect-based risk assessment. On the other hand, high levels of hope are linked to a lack of readiness for investment in assets involving potential risks, pointing to limited expectations about future developments. These correlations suggest that investment portfolios can be segmented based on different emotions, clustered primarily within low-to-moderate-risk assets. This research adds to the understanding of emotions’ influence at the individual level in a relatively neglected emerging economy, demonstrating how discrete emotions play a unique role in financial decisions.