How Sector Alpha Works

Sector Alpha is a free research platform that combines momentum analysis with fundamental scoring and valuation models for Indian equities. Every week after market close, we refresh data across 500+ stocks to help you understand which sectors are gaining strength and where overlooked value opportunities might exist.

Relative Strength: We measure each stock's 3-month price performance against the Nifty 500 index. Stocks consistently outperforming the index by 10%+ make it to our sector momentum lists.

Sector Breadth: We count how many stocks in each sector are outperforming. When breadth is expanding — more stocks joining the rally — it signals the sector is gaining strength. When breadth contracts, participants are dropping off.

We track weekly streaks, new entries, and re-entries to spot sectors where momentum is building or fading.

Every stock gets a fundamental score based on earnings growth, revenue growth, margin trends, valuation relative to sector peers, and cash flow quality.

We use different scoring models for financial companies (banks, NBFCs — using P/B, PEG, NPA trends) vs non-financial companies (using OPM, EV/EBITDA, CFO/PAT ratio).

Scores are graded into tiers: Very Strong (80+), Strong (60–79), Average (40–59), Weak (20–39), Very Weak (<20).

Non-financial companies: We use a DCF (Discounted Cash Flow) model calibrated for Indian markets — based on operating cash flow, ROCE-adjusted discount rates, and multi-year growth projections.

Financial companies: We use a Justified Price-to-Book model based on ROE sustainability, with caps tied to return quality.

Every stock gets Bear / Base / Bull fair value scenarios. Margin of Safety measures how much the current price differs from our base fair value — stocks trading well below are flagged as undervalued.

Growth inputs use our smoothed pipeline (below) rather than single-quarter spikes, which keeps valuations grounded.

Single-quarter earnings can spike or crash — that's noise, not signal. We combine three independent growth signals: 3-year annual CAGR, trailing twelve months YoY, and median of the last 4 quarters.

The weighted composite is bounded between a 2% floor and 30% cap to prevent extreme valuations from outlier quarters.

Deep value stocks are those trading below their intrinsic value while showing improving earnings. We score them based on valuation discount, earnings acceleration, and fundamental quality.

The goal: find stocks the market has overlooked where earnings are quietly turning around — a mismatch between business improvement and market price.

We track where each stock sits in its historical PE cycle — comparing current PE/PB to its 10-year median. Combined with a growth matrix that classifies stocks by earnings trajectory, this helps identify whether a stock's valuation is historically cheap or expensive relative to its own history.

• Financial data: Screener.in (quarterly results, annual results, balance sheets, cash flows)
• Price data: NSE/BSE via weekly snapshots
• AI insights: Parsed from publicly available earnings call transcripts
• All data refreshed weekly after market close