Borsa Istanbul has over 37 sectors, each driven by different macroeconomic forces. Sector analysis is a fundamental tool for portfolio diversification and sector rotation strategies.
What Is Sector Rotation?
Sector rotation exploits the observation that different sectors lead during different phases of the economic cycle. During expansion, industrials and tech tend to lead; during contraction, defensives and healthcare; during rate hikes, banking; during rate cuts, real estate. This cyclical pattern creates opportunities for systematic sector rotation strategies.
Key BIST Sectors
Banking: BIST's heaviest sector. Directly affected by interest rate environment, net interest margin is the key driver. Industrials (metals, chemicals, machinery): Correlated with global growth and commodity prices. Technology: Small but rapidly growing, high volatility. Energy: Sensitive to oil and natural gas prices. Retail and food: Driven by consumer confidence and inflation. Real estate (REITs): Tied to interest rates and housing price index.
Tracking Sectors with Momentum
Borsafolio's sector momentum factor heatmap displays each sector's 21-day average return as a visual heatmap. Green areas represent rising sectors, red areas declining ones. Academic research shows sector momentum is as strong a signal as individual stock momentum.
Sector-Based Stock Selection
The most effective approach is to first identify strong sectors, then select the best individual stocks within those sectors. This top-down strategy combines your macro view with individual stock analysis. Use the sector filter in Borsafolio's stock screener to apply this approach.
Related articles: Stock Screening Guide, What Is the Momentum Factor?, What Is Factor Investing?.
