One chart for the whole market's rotation
A table of sector returns tells you who has done well. It doesn't tell you who is about to. The relative rotation graph — RRG for short — was built for that second question. It shows, on one picture, where every sector stands against the market and which way it is heading.
It was developed by the Dutch analyst Julius de Kempenaer, and you will find it on professional terminals worldwide. On Stage2Stocks it plots every NSE sector — and every industry inside them — against the Nifty 50.
The two axes
Everything on an RRG is relative to the benchmark. Each sector gets two readings:
- Across — strength. How the sector is doing compared with the Nifty. Right of the centre line: beating it. Left: trailing it. The centre (100) means level with the market.
- Up and down — momentum. Whether that relative strength is growing or fading. Above centre: gaining on the market. Below: losing ground.
So a sector's dot answers two questions at once: is it stronger than the market? and is it getting stronger or weaker?
The four quadrants, and why sectors go round
The two lines split the chart into four quadrants, and sectors tend to travel through them clockwise:
- Improving (top left) — still weaker than the market, but gaining on it. The early turn, and often where new leaders come from.
- Leading (top right) — stronger than the market, and still gaining. The strongest place to be.
- Weakening (bottom right) — still stronger, but the gains are slowing. Leadership may be ending.
- Lagging (bottom left) — weaker than the market, and still falling behind.
Why clockwise? Because momentum turns before strength does. A lagging sector first stops losing ground (it moves up), then overtakes the market (it moves right), then its lead stops growing (it moves down), and finally it falls behind (it moves left). The loop can take weeks or many months, and it isn't always neat — sectors sometimes hook back before completing it — but the direction is the useful part.
Read the trail, not just the dot
Each sector on our graph carries a trail — its position over the last several weeks, one point per week. The trail tells you more than the dot:
- Direction. Which way is it heading? A sector moving up and to the right is improving, wherever it sits today.
- Length. Long gaps between points mean the sector is rotating fast; a tight cluster means little is changing.
- Curve. A trail bending upward in Lagging is the start of a turn. A trail bending down in Leading is the start of a fade.
Here is today's graph for NSE sectors:
Nothing selected — the graph is empty. Tick a sector above.
Using the RRG with stage analysis
The RRG answers "where is money rotating?" Stage analysis answers "is the trend healthy?" Used together:
- Shortlist sectors that are Leading, or Improving with a trail heading up and right.
- Check each one's share of stocks in Stage 2 — you want it high or rising.
- Open the industry view inside strong sectors: industries often rotate at different times.
- Look for Stage 2 stocks, early in the move, inside what survives.
- Be wary of sectors sliding from Leading into Weakening — tighten stops there.
Every NSE sector and industry against the Nifty, with trails of 4 to 12 weeks, the graph as it stood up to three months ago, and each group's quadrant history.
Questions people ask
What is an RRG chart?
A relative rotation graph plots each sector (or industry, or stock) against a benchmark such as the Nifty 50. The horizontal position shows how strong it is relative to the benchmark; the vertical position shows whether that relative strength is gaining or fading.
Who invented the relative rotation graph?
Relative rotation graphs were developed by Julius de Kempenaer, a Dutch market analyst, and are now used by professional investors worldwide to see sector rotation at a glance.
What do the four RRG quadrants mean?
Leading (top right): stronger than the market and gaining. Weakening (bottom right): still stronger but fading. Lagging (bottom left): weaker and still fading. Improving (top left): still weaker but gaining — often where the next leaders come from.
Why do sectors move clockwise on an RRG?
Because strength changes gradually. A sector's momentum turns before its level of strength does — first it starts gaining (moving up), then it becomes stronger than the market (moving right), then its gains slow (moving down), then it falls behind (moving left). Repeated, that traces a clockwise loop.
Is a sector in the Leading quadrant going up?
Not necessarily. The RRG is relative: in a falling market, a sector that falls less than the index can sit in Leading while its stocks go down. Check how many of the sector's stocks are actually in Stage 2 as well.