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This paper aims to examine the impact of caste and religious diversity on human capital outcome and external effect of ethnic capital on human capital accumulation process based on social fragmentation of West Bengal state which is mainly shaped under caste and religious lines.

A field survey was undertaken in which 440 respondents belonging to 440 households were interviewed in four municipalities of West Bengal – one each for most homogeneous and most heterogeneous along caste dimension and the equal number along religious line. For a cross sectional study during a one‐year period between January‐December 2006, this study considers stratified random sampling method (a mixture of both purposive and random sampling). In addition to construction of caste and a religion based fractionalization indexes, this study considers regression analyses of ordinary least square method in order to explore the stated objectives.

It suggests that more heterogeneous localities have lower outcome of per capita education after controlling the effect of per capita income. Moreover, the external effect of ethnic capital in heterogeneous localities has also lower outcome of human capital accumulation process.

The lower human capital accumulation in the heterogeneous localities along caste and religious dimensions might play an adverse effect on economic growth, crime, markets, technological breakthroughs and the arts and science. So, institutional measures by government and non‐government sources are needed to improve the stock of human capital, particularly in the heterogeneous localities influencing the positive impact on higher socio‐economic outcome in those localities.

The purpose of this paper is to address the impact of caste and religious diversity on individual‐level social capital.

Based on the World Bank's field tested assessment tools, SOCAT, the field survey of the authors' study considers data related to most of the indicators of social capital. This study considers stratified random sampling method. The selection of four municipalities was done by purposive method and the data include information on 440 households from four municipal wards chosen from four municipalities of West Bengal. Out of four municipalities, two are most homogenous (Serampore) and most heterogeneous (Ashoke Nagar Kalyan Garh) along caste dimension and the other two are most homogenous (Purulia) and most heterogeneous (Santipur) religion based municipalities. Caste and religious heterogeneity are measured by an index of ethnic fractionalization, ETHNIC; the index calculates the probability that two randomly‐chosen individuals will not belong to the same group.

Using different measures of social capital, results of the analysis strongly support adverse effect of ethnicity on individual non‐structural social capital. The data set and results imply that for every dimension, the formation of social capital for each individual is higher among same (homogeneous) individuals along caste and religious dimensions in their social sphere. Moreover the level of structural social capital in the form of associations and cognitive form are lower than individual form of non‐structural social capital for each individual, irrespective of interactions between same or different (heterogeneous) types.

The study is important in that it tries to explore the impact of diversity along caste and religious dimensions on the non‐structural individual social capital, in an Indian context; whereas all the previous literature focuses on diversity along ethno‐linguistic and racial lines and most of these studies consider social capital at aggregative level.

The purpose of this paper is to examine the presence the behavioral biases in Indian investors specifically, overconfidence, excessive optimism (pessimism), herd behavior and the disposition effect. It further investigates the role of demographics and investor sophistication in influencing the biases. Finally, it reveals which bias is most prevalent in the Indian context.

For this purpose, a survey has been conducted on the investors of the Delhi/NCR area. The data have been collected with the help of a structured questionnaire that is analyzed with the help of relevant statistical tools.

The survey evidence shows that behavioral biases are dependent on investors’ demographics and their trading sophistication with highest influencing factors being age, profession and trading frequency. Each bias corresponds to a specific set of investor characteristics and overconfidence comes out to be the most important bias in the Indian context.

The potential limitations of the present survey can be ascribed to socially desirable responses and their difference with actual market behavior. Further, due to time and resource constraint, the data set is limited to investors of only Delhi/NCR.

This study is most relevant for financial advisors, as it facilitates them in gaining a better understanding of their clients’ psychology. It can aid them in developing behaviorally modified portfolio, which best suits their clients’ predisposition.

The paper gives a unique insight on the investors’ profile corresponding to each bias under consideration. It not only updates the evidence on behavioral biases but also highlights which bias is the most influential in the Indian context.

The purpose of this paper is to capture the presence and impact of optimism in the Indian equity market.

The data set comprises the daily values of the Nifty 50 index, index options and Treasury-bill index for a period of five years (2006-2011). The focus of this paper is two pronged. It first investigates the presence of optimism (pessimism) using the pricing kernel technique suggested by Barone-Adesi et al. (2012). Second, it tries to analyze the relationship of this bias with stock market indicators like risk premium, market return and volatility using time series regression.

The findings indicate that the Indian equity market has been predominantly pessimistic from the period 2006 to 2011. The interaction of this bias with market indicators also unveils some interesting insights. The study shows that high past volatility can lead to pessimism in the Indian equity market and vice versa. It further explores that when the investors are rational, their risk and return relationship is positive while it tends to be negative when they are irrational. The impact of investors’ irrationalities on asset valuation has also been accounted by Brown and Cliff (2005).

The findings of the paper have significant implications for fund managers and asset management companies. It is recommended that they should try to identify behavioral biases in their clients before designing their portfolios.

This study is one of the very few attempts to capture the presence and impact optimism (pessimism) in the Indian equity market.