Impact of Home Bias and Diversification of Stocks among Indian Retail Investors: A Case Study of Hyderabad Karnataka Region

This study explores the impact of home bias on stock diversification among Indian retail investors, focusing on the Hyderabad Karnataka region. Home bias, a psychological tendency to favor domestic over international assets, may limit the potential benefits of diversification by exposing investors to unnecessary risks. By examining the preferences of retail investors in Hyderabad Karnataka, this research seeks to understand how home bias influences portfolio composition and diversification strategies. Using a quantitative methodology, survey data was collected from investors across six districts in the region. Statistical tests, including ordinal regression, were employed to examine the correlation between home bias (independent variable) and stock diversification (dependent variable). The findings suggest a significant negative relationship between home bias and diversification, indicating that an inclination toward domestic investments hampers optimal risk distribution. The study concludes with recommendations for improving diversification awareness among investors in the region to enhance portfolio resilience.