Hierarchy of Sectors in BSE SENSEX for Optimal Equity Investments Using Fuzzy AHP

Abstract

The stock market is considered as one of the most vital components of a free-market economy. The investments of the stock market are associated with a greater amount of risk. Due to the uncertainty associated with stocks, there is a great need to understand the trend in rising and fall of stocks corresponding to a particular sector or an industry to invest profitably. In view of this, authors have taken up a study to identify the best sector in BSE SENSEX for investments. Fuzzy Analytical Hierarchy Process is used to evaluate and study the dominance of various sectors including Automobile, Finance, Information technology, Oil, Pharmaceuticals, and Power. Four crucial derivatives criteria’s Return on equity, Book value per share, Price-earnings ratio, Price to book ratio are considered to study the dominance of each sector. The results of this study help in prioritizing the sectors for future investments.