Enhancing investment decisions in Indian stock market through MCDM approach

The purpose of this paper is to compare a set of Indian stocks listed in the Morgan Stanley Capital International (MSCI-114) Index. The present paper considers the fundamental performance of the stocks as a basis for comparison. A number of financial ratios have been used as criteria to compare the performance of the stocks. The underlying objective is to formulate a portfolio for investment decision-making. Since the decision-making is based on the performance of the stocks subject to multiple criteria, the current work presents a multiple-criteria decision-making (MCDM) framework. Priority of the criteria is based on objective information, and this study uses the inter-criteria correlation method for deriving the weight. It is compared and ranked as per their performance using a compromise solution-based model that trades off the criteria effect with considerable reliability and stability. Finally, the mean-variance (MV) model is incorporated for identifying adverse risks and optimising the portfolio.