India's capital markets have expanded rapidly due to regulatory reforms, technological advancements, and digital financial platforms. Household participation in equities and mutual funds, however, remains limited. This study examines investor behaviour in India through a behavioural finance perspective, focusing on the relationship between financial awareness, risk perception, and market participation. The study uses secondary data from the SEBI Investor Survey 2025 covering approximately 92,000 households across urban and rural India. Using descriptive and interpretative analysis, it evaluates patterns of awareness, participation, risk tolerance, and perceived barriers to investment. The findings reveal a significant gap between financial awareness and actual participation. While awareness levels are relatively high, participation remains low due to behavioural factors such as loss aversion, fear of volatility, perceived complexity of financial products, and trust deficits toward financial institutions. The study concludes that behavioural constraints rather than informational deficits largely explain low participation in India's securities markets. Behaviourally informed regulatory strategies, simplified financial communication, and trust-building measures are necessary to expand investor inclusion and deepen capital market participation.
Bansal et al. (Mon,) studied this question.