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Sector rotation: how to see which Nifty sectors are leading, lagging or turning
The Nifty can be flat while some sectors climb and others slide. Money moves from one part of the market to another, and that rotation is invisible in a single index number. Our free index rotation tracker sorts 35 Nifty indices into four groups every trading day, and checks whether equities as a whole are beating a liquid ETF. This guide explains how it works and how to read it.
Last updated 23 Oct 2026. Written by Vishal Trehan.
NSE is the National Stock Exchange of India. ETF is an exchange-traded fund. PSU is a public sector undertaking. FMCG is fast-moving consumer goods. IT is information technology. SEBI is the Securities and Exchange Board of India.
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Why the index average hides what is happening
Nifty 500 is an average of 500 companies across every sector. When it moves 1%, some sectors may have moved 5% and others may have fallen. Over the three months to 22 October 2026, for example, the Nifty IT index did about 20% better than Nifty 500, while Nifty FMCG did about 7% worse. Someone looking only at Nifty 500 would have seen neither move.
Sector rotation is the name for this shifting leadership. It usually happens gradually: a sector starts to improve against the market, pulls ahead, then slows down and eventually falls behind, often while another sector is starting its own climb.
The one idea behind the tracker: relative strength
Relative strength is simply an index divided by a benchmark. If Nifty Bank rises 3% while Nifty 500 rises 1%, Bank’s relative strength goes up. If Bank falls 2% while Nifty 500 falls 4%, Bank’s relative strength also goes up, even though Bank itself fell. That second case matters, and we come back to it below.
The tracker measures each index’s relative strength against Nifty 500 by default. You can switch the benchmark to Nifty 50 if you want to compare with the large-cap index most funds track.
The four groups
Each index is scored on two things: whether it is ahead of or behind the benchmark compared with its own recent average (the trend score), and whether that position is improving or worsening (the momentum score). Together they place every index in one of four groups.
| Group | What it means |
|---|---|
| Leaders | Doing better than the benchmark, and the lead is still widening. |
| Losing momentum | Still ahead of the benchmark, but the lead is shrinking. |
| Laggards | Doing worse than the benchmark, and falling further behind. |
| Gaining momentum | Still behind the benchmark, but closing the gap. |
Indices often move through the groups in a cycle: Gaining momentum, then Leaders, then Losing momentum, then Laggards, and round again. They do not always follow it. An index can jump from Laggards to Leaders after one strong week, or slip from Gaining momentum straight back to Laggards.
How the scores are calculated
- Trend score: the relative strength line divided by its own 10-week average, times 100. Above 100 means the index is doing better than the benchmark compared with its recent normal.
- Momentum score: the trend score now divided by the trend score 4 weeks earlier, times 100. Above 100 means the trend score is rising.
- Weekly and daily views: the weekly view (the default) uses weekly closes and filters out day-to-day noise. The daily view uses a 50-day average and a 10-day lookback, so it turns faster but gives more false starts.
The method is in the spirit of the relative rotation charts used by professional analysts, built from published index closes. It is our own calculation.
Which indices are covered
The tracker follows 35 indices in four families: size (Nifty 50, Next 50, Midcap 150, Smallcap 250, Microcap 250), sectors (Bank, PSU Bank, Financial Services ex-Bank, IT, Auto, Pharma, FMCG, Metal, Realty, Media, Consumer Durables, Chemicals, Capital Goods, Energy), themes (CPSE, Infrastructure, India Defence, Capital Markets, India Manufacturing, India Consumption, Commodities, MNC, India Tourism, EV and New Age Automotive, India Digital) and factor strategies (Momentum 30, Quality 30, Low Volatility 30, Alpha 50, Value 50).
Near-duplicates are left out. Nifty Private Bank moves almost exactly with Nifty Bank, and Nifty Oil & Gas overlaps heavily with Nifty Energy, so including them would only crowd the page.
How to read each section of the tracker
Every section ends with an “In plain English” box that describes the current reading in words. Here is what each part shows.
- What the data shows: a one-line verdict and a short written summary of the current leaders, the changes since last week, the size tilt (large caps against mid and small caps) and the equity-against-liquid check.
- Equity against a liquid ETF: the absolute picture, explained in the next section.
- Rotation timeline: one row per index and one coloured square per week for the last 12 weeks. Read across a row to see where an index has come from. A long green run is steady leadership; a row that keeps changing colour is choppy and less reliable.
- The four groups: the current members of each group, with each index’s 3-month return relative to the benchmark.
- Moved since last week: every index that changed group. A step to the next group in the cycle is a normal, gradual rotation. A jump (skipping a stage or going backwards) usually comes from one sharp move and is less settled.
- Returns and risk flags: 1-week to 1-year returns, the 3-month return against the benchmark, the 1-year return against a liquid ETF, and how far each index is from its 52-week high and its 200-day average. Indices 10% or more below their high (a correction) are shaded amber; 20% or more (a bear market) red.
- Index detail: tap any index name to see its price against its 200-day average, and its relative strength line against the benchmark.
Leading is not the same as rising
Relative strength has a blind spot. In a falling market, the “Leaders” are often just the sectors falling the least. A portfolio that holds only Leaders can still lose money if the whole market is going down.
That is why the tracker has a separate panel comparing Nifty 500 with a liquid ETF. The liquid benchmark is the Nifty 1D Rate Index, which tracks overnight lending rates; liquid ETFs such as LIQUIDCASE (Zerodha Nifty 1D Rate Liquid ETF) are built to track it, before costs. It rises a little almost every day, so it shows what money would have earned sitting in cash.
The panel makes three checks:
- Is Nifty 500 above or below its 200-day average (a common long-term trend line)?
- Has Nifty 500 returned more or less than the liquid benchmark over 12 months?
- And over 6 months?
It also counts how many of the 35 indices are 10%, 15% and 20% below their 52-week highs, and how many have beaten the liquid benchmark over a year. Comparing equity returns with a cash-like return over 6 to 12 months is known in research as absolute or “dual” momentum. In published research on global markets it has tended to flag long bear markets, but it also gives false alarms in sharp falls that recover quickly, and it is slow to turn after a bottom.
Why not a bond index? Longer government bonds lose value when interest rates rise. The Nifty 10 Year Benchmark G-Sec (Government Security) index, which includes interest, returned about −0.3% in the 12 months to 22 October 2026, while the liquid benchmark returned about +5.4%. A liquid ETF is the cleaner “money in cash” yardstick.
A real reading: 22 October 2026
Here is what the tracker showed at the close on 22 October 2026, in the weekly view against Nifty 500.
- Leadership was narrow. 9 of 35 indices were Leaders and only 1 was Gaining momentum, against 23 Laggards. The Leaders were IT, India Digital, Media, PSU Bank, Bank, Nifty 50, Quality 30, Low Volatility 30 and Infrastructure.
- Large caps were ahead. Nifty 50 was a Leader, while Midcap 150 and Smallcap 250 were both Laggards.
- Some leadership was steady, some was not. Bank had been a Leader for 8 straight weeks. PSU Bank had jumped straight from Laggards to Leaders in one week, and IT had swung from Leaders to Laggards and back again within 12 weeks.
- But the market as a whole was weak. Nifty 500 was 5.0% below its 200-day average. Over 12 months it returned −6.4%, against +5.4% for the liquid benchmark. Only 6 of the 35 indices beat liquid over the year, and 30 were 10% or more below their 52-week high.
- So the Leaders were mostly falling less, not rising. 6 of the 9 Leaders were below their own 200-day average.
Read together, the two halves of the page told one story: strength was concentrated in a few areas, led by IT, banks and large caps, inside a market that had trailed cash for a year. Neither half alone would have shown that.
What the tracker cannot do
- It does not predict. It describes how indices have performed against each other and against cash. A Leader can fall back and a Laggard can recover.
- Groups can flip. The momentum score reacts quickly, so some indices move in and out of a group week to week. The timeline shows which ones; give less weight to choppy rows.
- Indices are not stocks. A sector can lead while many of its stocks lag, because large companies carry more weight in the index.
- It updates once a day. Data are the daily closing values published by NSE Indices, loaded each trading evening. Data can be delayed or contain errors.
Common questions
Is the tracker free?
Yes. It needs no login or app and updates after every trading day.
Should I use the weekly or daily view?
Weekly is the main view and is less noisy. Daily shows turns earlier but with more false starts. A move that shows up in both is more established.
Why Nifty 500 as the default benchmark?
It covers over 90% of the free-float market value of NSE-listed companies, so it is the closest single measure of the market. Comparing a midcap index with Nifty 50 would mix up two questions: sector and company size.
Is this investment advice?
No. The tracker and this article are for education. They do not recommend buying, selling or switching any security, fund or asset class.
Also see the Nifty 200 and Nifty 500 market breadth tracker, which shows every 10 minutes how many stocks are taking part in the day’s move.
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