Module 15: Sector analysis

Companies in the same industry share the same drivers: demand, regulation, input costs and competition. Understanding the sector first makes it far easier to judge any single company in it.

01Why sectors matter

Much of a stock's move comes from its sector. Knowing what drives the sector explains moves that a company's own news does not.

02Banks and financials

Loan growth, net interest margin, asset quality and capital adequacy. Bank results are read through these numbers rather than plain revenue.

03Information technology

Deal wins, client spending in the US and Europe, attrition, the rupee and margins. IT revenues are earned in dollars and reported in rupees.

04FMCG

Volume growth, rural and urban demand, raw material prices and distribution reach. Steady, slow-growing businesses that trade at high valuations.

05Automobiles

Monthly sales numbers, the product cycle, fuel and commodity prices, and the shift to electric vehicles.

06Pharmaceuticals

Domestic sales, exports, regulatory approvals and inspections abroad, and the pipeline of new products.

07Metals, energy and cement

Cyclical sectors that follow global prices, infrastructure spending and capacity utilisation.

08Comparing companies within a sector

Use the sector's own metrics, compare peers on the same basis, and look at who leads, who is gaining share and at what cost.

09Where this leads

On A1Stock, Stock Radar shows sector moves across the cash market, and every stock page compares a company with its peers.