Cyclical Sectors (Metal, Realty, Auto, Infrastructure)
These sectors go through boom-and-bust cycles. Their profits swing a lot depending on the economy. The tricky part: they look cheapest (low PE) when profits are at their highest, often just before a slowdown. And they look most expensive when profits are at their lowest, which might actually be a good time to invest. Don't use PE alone here. Look at whether demand in that industry is rising or falling.
Defensive Sectors (FMCG, Pharma, IT)
These companies sell products people need regardless of the economy (medicines, food, software services). Their profits are steady, so their PE stays in a predictable range. When PE shows "cheap vs history" for these sectors, it's a more reliable signal because earnings aren't swinging wildly.
Banking & Financials (Bank, Private Bank, PSU Bank, Financial Services)
Bank profits can jump around because of loan losses (NPAs) and one-time write-offs. So PE can be misleading in any single quarter. The PE percentile still helps compare where the sector stands vs its own past, but also pay attention to whether loan growth is healthy and bad loans are under control.
Market-cap Segments (Midcap, Smallcap, Microcap)
These group companies by size, not industry. They tend to rise together when markets are optimistic and fall together when fear rises. Smallcaps can look cheap for long periods simply because investors prefer safety during uncertain times. A low PE here doesn't always mean opportunity, it might just mean the mood hasn't shifted back to risk-taking yet.
Thematic Indices (CPSE, PSE, Defence, India Manufacturing)
These are built around a theme (government companies, defence spending, manufacturing push). They often move based on government policies and budgets rather than pure business performance. Many of these indices are relatively new (started after 2020), so there isn't enough history to draw strong conclusions from PE percentiles. Treat signals here with extra caution.