Indian Stock Market Sees Sectoral Shift: What Should You Buy?

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Stock Market: Electricals, Gas Transmission Lead; IT, FMCG Lag

By S JHA

MUMBAI, June 30, 2025 – The Indian stock market is undergoing a notable sectoral rotation, with momentum sharply shifting toward sectors like Electricals, Gas Transmission, and Telecom, while traditional heavyweights such as IT and FMCG are losing steam, according to StockEdge’s latest analysis.

Based on key technical indicators like Relative Strength (RS), Relative Strength Index (RSI), and Simple Moving Averages (SMA), StockEdge has identified the sectors currently driving market gains and those facing headwinds.

Ratings Sector tops the chart, with 100% of stocks showing RS > 55 and RSI > 50, along with strong performance across 20/50/100-day SMAs. This sector’s across-the-board strength reflects sustained investor interest.

Electricals follows closely, with 95% of stocks above RSI 50 and SMAs above 90%. The sector continues to benefit from government push on infrastructure and renewables, echoing its 19.5% rally in October 2024.

Gas Transmission shows solid technical resilience—100% of stocks above RSI 50 and SMAs, with RS > 55 at a modest 63%. The sector is supported by India’s clean energy goals and ongoing energy infrastructure development.

Telecom is also seeing significant action. About 99% of stocks are above RSI 50, and 94% are above SMA benchmarks. RS > 55 stands at 85%, indicating strong yet improvable short-term positioning. Growth is buoyed by increasing 5G adoption and digital expansion.

Infrastructure, Crude Oil, and Trading are emerging as defensive yet reliable performers. Infrastructure has 83% of stocks above RSI 50 and 93% above SMA 100, reflecting strong capital spending on roads, railways, and smart cities. Crude Oil holds firm with RS > 55 at 81% and full strength in SMA 100, despite global price volatility. Trading, though less flashy, shows consistent bullishness across all indicators.

“Markets are shifting gears, and so are the sectors leading momentum,” StockEdge noted in a note in its Telegram channel, highlighting how macroeconomic themes—like India’s renewable energy target of 500 GW by 2030—are reshaping investor focus.

The IT Sector, traditionally a top performer, is facing a slowdown. It has RS > 55 at just 49%, and SMA 50/100 have fallen below 70%. High valuations, stagnant earnings, and exposure to global uncertainty are weighing on sentiment.

FMCG, Chemicals, and Diversified sectors also show weak technicals, with RS and RSI mostly under 50%. Inflationary pressures and reduced discretionary spending are squeezing consumer demand in FMCG.

At the bottom are Alcohol, Abrasives, and Miscellaneous sectors, where all indicators are below 50%, indicating a complete loss of momentum. StockEdge advises avoiding these unless clear reversal signs emerge.

StockEdge emphasized the importance of sector rotation—shifting capital from laggards to leaders—as a key strategy. For instance, Banking, once a top pick, now shows signs of overheating. With nearly 90% of banking stocks in high-momentum zones, investors who entered earlier are advised to consider booking profits.

Disclaimer: Investments in securities markets are subject to market risks. Readers should conduct their own research before investing.

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