Published Online:April 2026
Product Name:The IUP Journal of Applied Finance
Product Type:Article
Product Code:IJAF050426
DOI:10.71329/IUPJAF/2026.32.2.105-127
Author Name:Ramya Yaligar and Ashwini A N
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:105-127
This study investigates how retail investors understand risk for green energy—solar, wind and hydrogen stocks—and traditional energy—oil, gas and coal stocks—and how their risk assessments affect their investment choices. The study uses Modern Portfolio Theory, Prospect Theory, Information Asymmetry Theory, and Agency Theory as its theoretical foundation. The primary data was collected from 100 participants consisting of 80 retail investors and 20 financial advisors from Capital Prudence Financial Services, Hubballi, Karnataka. The secondary data was collected from SEBI, NSE/BSE, IEA and EY reports to conduct four statistical tests: Spearman’s rank correlation, multiple linear regression, chi-square test of independence and ANOVA. The study found that investors reduce their portfolio investments in green stocks because they perceive higher risk in green stocks. Further, investment decisions are made based on their social environment rather than their understanding of risk. Investors who earn more money have higher ability to handle financial risks, and they need to understand government regulations better because this knowledge determines their investment confidence. The study shows that Indian retail energy investors experience an ‘intentionaction gap’ because they intend to move towards sustainability, but their investment behavior keeps them investing in traditional energy. Green energy needs structural reforms to change from satellite holdings to core portfolio components because information access needs to be improved, behavioral advisory needs to be enhanced, and policy continuity needs to be established.
India’s financial system is currently undergoing the most significant changes in its history. Digital brokerage platforms now operate throughout India because SEBI’s financial inclusion programs enabled 151 million demat accounts to exist by 2024, which represents a 25% annual growth rate (SEBI, 2024). The Indian government’s 500 GW renewable energy capacity target for 2030, which depends on major policies such as production-linked incentive (PLI) scheme, National Green Hydrogen Mission, and mandatory ESG disclosure frameworks, has enabled retail investors to reach their highest level of participation.