Herd Behaviour
The tendency to follow the actions of a larger group rather than one's own analysis.
How it is identified
Test: the decision follows what others are doing, without independent evidence being gathered or weighed
Unit
qualitative
In depth
Herding is partly rational: others may know something, and career risk punishes being wrong alone far more than being wrong with everyone. That second reason is why professional investors herd as much as individuals do. It amplifies moves in both directions, since buying begets buying, and it is the mechanism behind bubbles and crashes. In India it is most visible in IPO frenzies, small-cap runs and thematic fund launches, where the crowd's presence is itself cited as evidence.
Worked example
An issue is oversubscribed 180 times, which is reported as evidence of quality. The subscription number measures how many people applied, and every one of them was reading the same reports about how many people were applying.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Herd Behaviour” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.