Overdoing something is bad and under doing is not an exemption. This holds good in case of diversification. Over diversifying and under diversifying can harm your portfolio. Some of the reasons why investors go for over diversification are; They have lot of disposable incomeThey think, more the diversification more will be their earningsInterpreting market conditions in a wrong wayIt is a reason for them to be proud of themselves.Their relative or friend has shares of more companies.
Reasons for under diversification: They are mostly risk averse investorsThey want to play safe in the stock marketWrongly interpreting the market conditions