Irrational Behavior on Rational Stock Investment Decision Making

Stock market is the important asset of any economy. The stock market plays a key role in the growth of the economy and trend of the market and volatility affect the economic health of a country. In the view of Colombo Stock Exchange (CSE) is the one of the dynamic exchanges in South Asia. After the civil war end, CSE was the best performing stock exchange in the world in 2009. Although, the market capitalization represents 31% of GDP is still lower to compare with other emerging markets. On the other hand, the market has continued to experience unexplained volatility pertaining to both trade volume market capitalization due to market fundamentals. CSE¿s investors may place too much faith in their own forecasts that lead to bias in their actions. Therefore, it is noteworthy to study and understand the behavior of individual investor at CSE and factors influencing on their behaviours.