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NISM-Series-XV: Research Analyst · Industry Analysis

Industry Classification and Sector Indices for NISM Research Analyst

Updated 11 October 2026 · Fact-checked

Industry classification sorts companies into groups by their main business so you can compare like with like. GICS uses four levels: sector, industry group, industry and sub-industry. NIC is India's official activity code system. Sector indices track the share prices of one group of listed companies. Classify by main source of revenue.

Understand Industry Classification and Sector Indices

A research analyst cannot value a company in isolation. Peers face the same demand, costs and regulation, so you compare a company with its peers. To do that, you first need a clear system that puts companies into groups. That system is an industry classification.

The broadest group is the sector, such as Financials or Information Technology. A sector holds several industries, which are narrower, such as Banks or Software Services. So sector is wide and industry is narrow. Exam questions often test this order.

GICS (Global Industry Classification Standard) is a global system developed by MSCI and S&P Dow Jones Indices. It has four levels, from broad to narrow: sector, industry group, industry and sub-industry. A company is placed by its principal business activity, which is usually judged by where most of its revenue comes from, with earnings and market perception as supporting evidence. A company gets one classification only.

NIC (National Industrial Classification) is India's official classification of economic activities, issued by the government's statistics authority. It is built on the United Nations ISIC system. It uses nested codes that go from broad sections down to detailed classes. It is used for official statistics and surveys, not for stock market grouping.

A sector index tracks the prices of listed companies in one sector. Indian exchanges publish many, such as Nifty Bank, Nifty IT, Nifty Pharma, Nifty FMCG, Nifty Auto, Nifty Metal, Nifty Realty and Nifty Energy, and BSE has its own sectoral indices like S&P BSE Bankex. Analysts use them to judge how a sector is performing against the broad market and to compare a stock with its sector.

Key formulas to remember

GICS hierarchy
Sector → Industry Group → Industry → Sub-Industry
Four levels, broad to narrow. Sector is the widest level.
Classification rule
Company is placed by its principal business activity
Usually the main source of revenue. One company gets one classification.
NIC
NIC = India's national classification of economic activities, based on UN ISIC
Used for official statistics, not stock market peer grouping.
Sector vs industry
Sector ⊃ Industry
A sector contains several industries, not the other way round.

How to solve Industry Classification and Sector Indices questions

Use this method for any question on classification or sector indices.

  1. 1Read the question and note whether it asks about GICS, NIC or a sector index.
  2. 2Check the level asked: sector, industry group, industry or sub-industry.
  3. 3Remember the order from broad to narrow and place the term on that ladder.
  4. 4For placing a company, look for its principal business activity, mainly the largest revenue source.
  5. 5For NIC, link it to official Indian statistics and the UN ISIC base. For GICS, link it to global comparison.
  6. 6For indices, remember an index tracks prices of listed companies in one sector; it is not a classification system.
  7. 7Remove options that reverse the hierarchy or mix up GICS and NIC, then pick the remaining one.

Quickest way: Three-second sort

When to use it: Use when the question is a definition or a match-the-term item and time is short.

  1. GICS means global and four levels, sector at top.
  2. NIC means India and official activity codes.
  3. Sector index means share price index of one sector.
  4. Any option that makes industry wider than sector is wrong.

Common mistakes in Industry Classification and Sector Indices

  • Treating sector and industry as the same thing

    Everyday speech uses them loosely.

    Fix: Sector is the broad group. Industry sits inside a sector. Banks is an industry within the Financials sector.

  • Saying NIC is a global standard

    Both GICS and NIC are called classifications.

    Fix: NIC is India's national system based on UN ISIC. GICS is the global one used by index providers.

  • Classifying a company by its group or brand name

    Diversified groups have many businesses.

    Fix: Use the principal business activity, usually the biggest revenue source.

  • Thinking a sector index is a classification system

    Index names such as Nifty IT sound like a category.

    Fix: A sector index only tracks prices of selected listed companies. It does not classify companies.

  • Placing a company in two GICS sub-industries

    A firm with several segments seems to fit more than one.

    Fix: Each company gets one classification based on its main business.

Worked examples

Example 1

Under GICS, which of the following lists the levels correctly from the broadest to the narrowest? (A) Industry, sector, industry group, sub-industry (B) Sector, industry group, industry, sub-industry (C) Sector, industry, industry group, sub-industry (D) Sub-industry, industry, industry group, sector

Show the solution
  1. GICS has four levels.
  2. The widest level is the sector.
  3. Next comes the industry group, which holds several industries.
  4. Then the industry, then the narrowest level, the sub-industry.
  5. Only option B follows this order. A and C misplace levels. D runs narrow to broad.

Answer: (B) Sector, industry group, industry, sub-industry

Example 2

A company earns most of its revenue from software services but also runs a small real estate arm. How is it classified, and which sector index would an analyst use to benchmark it?

Show the solution
  1. Classification follows the principal business activity.
  2. Most revenue comes from software services, so the company is placed in the Information Technology sector.
  3. The small real estate arm does not change this, and the company gets one classification only.
  4. To benchmark, the analyst would use an IT sector index, such as Nifty IT, not a realty index.

Answer: It is classified in the Information Technology sector by its main revenue source, and is benchmarked against an IT sector index such as Nifty IT.

Exam tips

  • Expect direct definition questions: levels of GICS, what NIC is, what a sector index tracks.
  • Watch for options that reverse the sector and industry hierarchy.
  • Remember the placement rule: principal business activity, mostly revenue.
  • Wrong answers cost marks in NISM-Series-XV, so skip only if two options are still equally likely after elimination.

Practice questions from Industry Analysis

Industry Classification and Sector Indices in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Industry Classification and Sector Indices: frequently asked questions

What is the difference between sector and industry?

A sector is a broad group of related economic activity, like Financials. An industry is a narrower group inside a sector, like Banks. One sector holds many industries.

What are the levels of GICS?

GICS has four levels: sector, industry group, industry and sub-industry. They run from broad to narrow. Each company is placed by its principal business activity.

What is NIC and how is it different from GICS?

NIC is India's National Industrial Classification of economic activities, based on the UN ISIC. It is mainly used for official statistics. GICS is a global system used by investors and index providers to group listed companies.

What are examples of sectoral indices in India?

Examples include Nifty Bank, Nifty IT, Nifty Pharma, Nifty FMCG, Nifty Auto, Nifty Metal, Nifty Realty and Nifty Energy. BSE also publishes sectoral indices such as S&P BSE Bankex. The list can change, so learn the idea rather than a fixed list.