- The short — leadership & laggards
- Sector drivers & tells
- Rotation map & risk flags
- Revisions & breadth quick read
- Exit rules & sizing
The short
- Leaders: Banks and Capital Goods on earnings visibility and execution.
- Improving: Autos, Pharma, Power add breadth; monitor inventory, US pricing, PLFs.
- Cooling: IT and frothy Discretionary midcaps; premium needs TCV or footfall proof.
- Microcaps: Liquidity pockets thinning—avoid crowded, low-float spikes into results.
- Play: OW Banks/Cap Goods; N Power/Autos/Pharma; UW IT/frothy smallcaps.
Sector drivers & tells
Banks & Financials
- NIM path stabilising; deposit beta manageable where CASA is resilient.
- Asset quality steady; capex corridors lift corporate credit.
- Watch: Wholesale funding share; unsecured growth trajectory.
Capital Goods/Industrials
- Backlogs at multi-year highs; conversion to revenue key.
- Input costs within bands; diversified orderbooks retain pricing power.
- Watch: Execution cadence; single-client dependency.
Autos
- Festive sell-through paving demand; 2W recovery uneven.
- Discounting normalises as inventory clears.
- Watch: Dealer weeks ≤5; cancellations vs pre-bookings.
Pharma
- US launches + remediation progress support margins; India branded steady.
- Watch: US price erosion cadence; site clearances.
IT Services
- Decision cycles elongated; cost-takeout dominates.
- Watch: Large-deal TCV with ramp dates; onsite mix impact.
Power/Utilities
- Demand robust; tariff clarity supports receivables.
- Watch: Fuel linkages; PLFs; working-capital cycle.
Rotation map
| Sector | Status | Primary driver | Risk flag | Positioning cue |
|---|---|---|---|---|
| Banks | Leader | Credit growth + asset quality | Deposit beta spike | Favor lenders with OCF/EBITDA >0.8; lower wholesale mix |
| Capital Goods | Leader | Backlog + execution | Input cost creep | Prefer diversified books; derisk single-client projects |
| Autos | Improving | Festive demand | Inventory overbuild | Trim if dealer weeks >6 sustained |
| Pharma | Improving | US launches | US price erosion | Stick to clean plants + ANDA pipeline |
| IT | Cooling | Delayed ramps | Macro scare | Hold cost-takeout leaders; avoid premium w/o TCV |
| Power | Improving | Tariffs, demand | Fuel bottlenecks | Blend regulated + merchant exposure |
Revisions & breadth quick read
- Net revisions: Banks/Capital Goods positive; IT mixed to negative; Auto/Pharma improving.
- Breadth: % stocks above 50-DMA improving ex-IT; smallcap breadth off extreme highs.
- Risk: Fade low-ADTV microcap spikes into events; size by liquidity tiers.
Exit rules & sizing
- Trim a leader if it underperforms Nifty by 5–7% over 4 weeks or net revisions flip negative.
- Cut beta if A/D line rolls over for two consecutive weeks.
- Use ADTV-based sizing; avoid low-float crowding near results/placements.
Positioning OW: Banks, Capital Goods · N: Power, Autos, Pharma · UW: IT, frothy discretionary smallcaps.