A relative rotation graph (RRG) plots every sector against a benchmark, here NIFTY 50.
- The horizontal axis, RS-Ratio, is relative strength: right of 100 means the sector is beating NIFTY more than usual.
- The vertical axis, RS-Momentum, is the direction of that strength: above 100 means it is improving.
The four quadrants
- Leading (top right): strong and getting stronger.
- Weakening (bottom right): still strong, but losing pace.
- Lagging (bottom left): weak and getting weaker.
- Improving (top left): still weak, but gaining.
Sectors usually travel clockwise. Traders often look for sectors moving from Improving into Leading.