When markets move — whether sharply down or unexpectedly up — human psychology often pulls investors toward decisions that feel rational in the moment but may not align with their original financial plan. Behavioural finance, a field that combines psychology with economics, identifies recurring patterns, or biases, in how people process financial information. Understanding these patterns is a useful starting point for any investor trying to make sense of their own reactions to market events.

Recognising a bias does not eliminate it, but awareness is the first step toward more deliberate financial decision-making.

One of the most common is loss aversion: research consistently shows that the emotional pain of losing a certain sum of money tends to feel roughly twice as intense as the pleasure of gaining the same amount. This asymmetry can lead investors to hold on to losing positions longer than they otherwise might, simply to avoid the discomfort of converting a paper loss into a realised one. A related pattern is recency bias, where recent events receive disproportionately large weight in decision-making. On a day like today, when Brent crude oil prices rose 2.49 percent to above 91 US dollars and bond prices fell, it is natural for an investor to mentally extrapolate that move and assume it will continue indefinitely — even though market conditions shift continuously and in unpredictable ways. Recency bias can cause both overreaction to short-term negative news and, conversely, overconfidence after a run of positive days.

A third widely documented bias is the herd instinct, or social proof: the tendency to feel more comfortable taking an action when many others appear to be doing the same thing. This can amplify both upswings and downswings beyond what underlying fundamentals might justify, as individual investors take cues from the crowd rather than from their own analysis. India VIX closed at 12.60 today — a relatively subdued reading — which means that as a group, market participants were not pricing in extreme near-term volatility despite the day's negative headline news. Being aware of herd dynamics helps investors distinguish between a broadly shared, evidence-based view and one that has simply become popular. None of this constitutes advice on what to do; it is simply a reminder that markets are made up of human participants, and that human psychology is a consistent, measurable force within them.