What is the importance of sector rotation in portfolio management?

Sector rotation in portfolio management is important for diversification and optimizing returns. By strategically shifting investments among different sectors based on economic and market trends, investors can capitalize on sectors expected to outperform while reducing exposure to underperforming ones. This approach helps manage risk and enhances the overall performance of a diversified portfolio in various market conditions.

Sector rotation plays very crucial role in generating alpha for your portfolio (Alpha means extra return than benchmark index(for India Nifty)). Specially bull market sector rotation management is important as well as difficult. As per my personal experience, if you can just stick to stocks which are breaking out from there long consolidation, that take of sector rotation in any market.