WHY EVEN SEASONED INVESTORS FALL FOR EMOTIONAL TRAPS IN VOLATILE MARKETS

Market volatility is inevitable. Letting your emotions drive investment decisions doesn't have to be. Investing isn't just about numbers—it's about nerve. During periods of market turmoil, even the most seasoned investors can fall prey to their own instincts.

- ANKUR PUNJ

While charts, models and forecasts may guide strategy, it's human psychology that steers the wheel in critical moments. That's why understanding—and managing—behavioral and emotional biases is just as important as reading balance sheets. These biases can quietly undermine decision-making. But recognizing them is the first step toward building a resilient, long-term portfolio.

Anchoring bias Anchoring happens when an investor fixates on a specific reference point—like a historical high or target price—regardless of changing conditions. In such cases, the investor holds on to an asset simply because it once had a high value, even though current market conditions have changed.

For example, some investors have clung to themes such as defense and railway PSUs over the past year, influenced by previous price rallies. To counter this, it's best to focus on broad-based, diversified strategies that aren't dependent on a single storyline.