Sectoral analysis involves evaluating the performance, risks, and future outlook of specific industries or sectors like IT, Pharma, Banking, FMCG, etc. This method helps investors allocate capital efficiently based on prevailing economic cycles. For example, defensive sectors like FMCG or healthcare may outperform during downturns, while cyclical sectors like auto or real estate shine during expansions. Analyzing sector growth potential includes looking at macroeconomic factors, government policies, demand trends, and technological shifts. Financial metrics like ROE, PE ratio, and debt-equity ratio for leading companies in a sector are also assessed. Sector rotation is a strategy based on shifting investments across sectors depending on the business cycle. Sectoral ETFs and mutual funds are popular vehicles for targeted exposure. By understanding sector dynamics, investors can diversify portfolios and mitigate unsystematic risk. Successful investors don’t just pick good stocks—they pick good sectors at the right time.