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Your portfolio is analysed for 7 Risks. Here you can see details & actions for Sector Exposure. This portfolio is over-exposed to the BFSI sector. So, adding another Bank stock to this portfolio would be an incorrect decision.
Here are the cards of BFSI stocks in this portfolio. A stock-card also shows other risks that a stock carries. To reduce the Stock exposure risk, some of these stocks need to be sold.
At the bottom of each risk, you can see the explanation about each risk.
In this sector 3 stocks have Business Risk,4 stocks have Valuation Risk.
CMP: 272 | ₹69 K (7.3% of Portfolio)
CMP: 292 | ₹53 K (5.5% of Portfolio)
CMP: 1788 | ₹41 K (4.3% of Portfolio)
CMP: 600 | ₹30 K (3.1% of Portfolio)
CMP: 493 | ₹25 K (2.6% of Portfolio)
CMP: 111 | ₹12 K (1.3% of Portfolio)
CMP: 438 | ₹11 K (1.1% of Portfolio)
CMP: 1778 | ₹11 K (1.1% of Portfolio)
CMP: 138 | ₹8 K (0.8% of Portfolio)
CMP: 1054 | ₹5 K (0.6% of Portfolio)
CMP: 1157 | ₹1 K (0.1% of Portfolio)
When you invest a significant portion of your portfolio, typically more than 25%, in a single sector, or in multiple sectors that are highly correlated, your portfolio is subject to sector exposure risk.
Companies in the same sector are likely to be impacted by the same economic factors. Or sometimes the same economic factor adversely impacts multiple sectors. For example a sharp increase in interest rates is likely to have a negative effect on both banking and infrastructure sectors. The market reacts and prices fall, sometimes sharply. Therefore a large exposure to a single sector, or correlated sectors, could result in a drastic fall in your portfolio market value.
Sector exposure may not always be a bad thing. Taking this risk is justified only when compensated with good returns. For this you must be sure that the sector/companies will bounce back in the time frame you are willing to remain invested and that the current prices are very attractive.
It is best to consult a fiduciary investment advisor before chasing higher returns at the cost of sector exposure risk.