What is Sector Rotation – The Strategy of Smart Money

📊 Sector rotation is a powerful concept where institutional investors shift capital between sectors based on market cycles and economic conditions. 🔍 Why it matters: Instead of chasing stocks, smart investors follow the money. If a sector starts outperforming index returns consistently, it often means institutional accumulation. ✅ Typical Rotation Cycle: Early Recovery: Auto, Consumer Discretionary Mid-Cycle: Banks, Capital Goods, Infra Late Cycle: FMCG, Pharma, IT Recession Fear: Gold, Defensive Stocks 📌 Example: If Bank Nifty starts leading Nifty with rising volumes & FII interest, it often signals a bullish leg in financials. Same logic applies for IT or PSU themes. 🧠 As an RA, I monitor relative strength, volume surge, and price breakout across sectors weekly to position ahead of crowd.