NSE Sectoral Relative Strength

Sectoral relative strength compares the price performance of different sector indices against each other and against the broad market (Nifty 50). By rebasing all sectors to a common starting point (0%), you can see which sectors are gaining or losing ground relative to others. A sector that rises more than Nifty is showing relative outperformance; one that rises less or falls more is showing relative underperformance.

This is different from looking at absolute index levels. A sector index might be at an all-time high but still underperforming relative to the market. Relative strength strips away the overall market direction and focuses purely on which sectors are attracting more capital.

• 1. Identify underperforming sectors: Look for sectors that have fallen significantly over 3 months. Ask yourself: is this decline temporary (e.g., regulatory changes, one-off events) or structural? If temporary, the best companies in that sector may be available at attractive valuations.
• 2. Spot momentum in outperforming sectors: Sectors showing consistent strength across 1W, 1M, and 3M periods have strong momentum. Consider whether this momentum is sustainable based on fundamentals like earnings growth and economic conditions.
• 3. Compare short-term vs long-term trends: A sector that is negative over 3 months but positive over 1 week may be showing early signs of a reversal. Conversely, a sector strong over 3 months but weakening over 1 week might be losing steam.
• 4. Drill into companies: Once you identify an interesting sector, click the sector name in the table above to browse the companies in that sector. Then use our financial analysis tools to evaluate individual companies.
• 5. Combine with valuation data: Use this page alongside our Sector PE Charts to find sectors that are both underperforming (cheap) and have low PE ratios relative to their historical average. This combination of relative weakness and low valuation can signal opportunity.

Sector rotation is the natural movement of investment capital from one sector to another as the economy moves through different phases. Understanding where we are in the cycle helps explain why certain sectors are outperforming.

During economic expansion, cyclical sectors like Auto, Realty, and Infrastructure tend to outperform as consumer spending and capital investment increase. During slowdowns, defensive sectors like FMCG and Pharma typically hold up better because demand for essentials and healthcare remains stable regardless of economic conditions.

• Past performance is not predictive: A sector that outperformed last quarter may not continue to do so. Always combine relative strength with fundamental analysis.
• Index composition matters: Sector indices are market-cap weighted. A few large companies can dominate the index performance. The sector's performance may not reflect all companies equally.
• Short-term noise: Weekly performance can be volatile and driven by news events rather than fundamental shifts. Focus on the 1-month and 3-month trends for more meaningful signals.
• Global factors: Some sectors like IT are heavily influenced by global factors (US economy, currency movements). Domestic factors alone may not explain their relative performance.