Scenario analyzer

Scenario Analyzer (India Markets)

Overview

This skill takes a news headline or event and builds probabilistic 18-month scenarios with cascading 1st, 2nd, and 3rd order sector impacts and specific stock recommendations for the Indian market.

Architecture

Skill (Orchestrator)
├── Phase 1: Preparation
│   ├── Headline parsing (keywords, entities, actions, numbers)
│   ├── Event classification
│   └── Load references
├── Phase 2: Analysis
│   ├── Collect related news (past 2 weeks via WebSearch)
│   ├── Build 3 scenarios (Base/Bull/Bear, probabilities sum to 100%)
│   ├── Map 1°/2°/3° sector impacts
│   └── Identify 3-5 positive + 3-5 negative impact stocks
└── Phase 3: Report Generation
    ├── Compile findings
    ├── Assess scenario probability distribution
    └── Save report

Event Classification

Classify the headline into one of these categories:

Category	Indian Context Examples
Monetary Policy	RBI rate decision, CRR/SLR change, liquidity measures
Fiscal Policy	Union Budget, GST changes, PLI schemes, disinvestment
Geopolitical	India-China border, India-Pakistan, Russia-Ukraine, Middle East
Commodity	Crude oil shock, gold prices, metal tariffs, food inflation
Regulatory	SEBI rules, RBI NPA norms, telecom spectrum, pharma FDA
Corporate	Major M&A, earnings surprise, promoter pledging, fraud
Global Macro	Fed rate decision, US recession, China slowdown, tariffs
Weather/Agriculture	Monsoon forecast, crop damage, food prices
Elections/Political	State elections, central govt policy shifts

Workflow

Phase 1: Preparation

1. Parse the Headline

   • Extract key entities (companies, sectors, countries, institutions)
   • Identify the action (increase, decrease, ban, approve, delay)
   • Note any numbers (rate changes, ₹ amounts, percentages)
   • Classify the event type

2. Load References

   Read: references/headline_event_patterns.md
   Read: references/sector_sensitivity_matrix.md
   Read: references/scenario_playbooks.md
   

Phase 2: Analysis

3. Collect Context

   • Use WebSearch to find related news from the past 2 weeks
   • Identify any pre-existing trends or expectations
   • Note market's initial reaction if available

4. Build 3 Scenarios

   For each scenario:

   • Name: Descriptive title
   • Probability: Must sum to 100% across all 3
   • Timeline: 3 phases (0-6 months, 6-12 months, 12-18 months)
   • Description: What unfolds in each phase
   • Key Assumptions: What must hold true

   Typical structure:

   • Base Case (40-55%): Most likely outcome given current trajectory
   • Bull Case (20-35%): Optimistic scenario with positive catalysts
   • Bear Case (15-30%): Pessimistic scenario with adverse developments

5. Map Sector Impacts

   For each scenario, assess impacts using the sector sensitivity matrix:

   Order	Definition	Example (RBI Rate Cut)
   1st	Direct, immediate	Banks: NIM compression, Housing: demand boost
   2nd	Indirect, 3-6 months	Auto: loan demand, Real estate: prices
   3rd	Tertiary, 6-18 months	Cement: construction demand, Durables: consumer spending

   Use NSE sectoral indices:

   • Nifty Bank, Nifty IT, Nifty Pharma, Nifty Auto, Nifty FMCG
   • Nifty Metal, Nifty Realty, Nifty Energy, Nifty Infra
   • Nifty PSU Bank, Nifty Private Bank, Nifty Financial Services

6. Identify Stock Impacts

   For each scenario:

   • 3-5 stocks that benefit most (positive impact)
   • 3-5 stocks that suffer most (negative impact)

   For each stock, provide:

   • Ticker (NSE symbol)
   • Current price (use broker MCP get_ltp — Groww or Zerodha Kite — if available)
   • Impact channel (why this stock is affected)
   • Magnitude estimate (High/Medium/Low)

Phase 3: Report Generation

7. Generate Report

   Save as reports/scenario_analysis_<topic>_YYYYMMDD.md with sections:

   1. Related News (5-10 recent articles with sources)
   2. Scenario Overview (3 scenarios with probabilities)
   3. Timeline (0-6m, 6-12m, 12-18m phases for base case)
   4. Sector Impact Matrix (1°/2°/3° impacts per sector)
   5. Positive Impact Stocks (3-5 with rationale)
   6. Negative Impact Stocks (3-5 with rationale)
   7. Investment Implications (actionable takeaways)
   8. Risk to Scenarios (what could shift probabilities)
   9. Disclaimer

Quality Standards

• All probabilities must sum to 100%
• Every impact claim must have a causal chain (event → mechanism → impact)
• Stock picks must include the impact channel, not just "will benefit"
• Consider second-order effects (e.g., rate cut → weak INR → IT sector benefit)
• Flag any confirmation bias in scenario construction
• Include both sectors that benefit AND those that lose

Example Usage

User: "RBI cuts repo rate by 25 bps to 6%"

Analyst:
1. Classification: Monetary Policy
2. Key entities: RBI, repo rate, 25 bps, 6%
3. Collects recent RBI commentary and market expectations
4. Scenarios:
   - Base (50%): One more cut expected → banks pass on, housing demand rises
   - Bull (30%): Cycle of 75-100 bps cuts → strong credit growth, equity rally
   - Bear (20%): Global inflation returns → RBI pauses → rate-sensitive sell-off
5. 1° impacts: Banks, NBFCs, Housing Finance, Auto
6. 2° impacts: Real Estate, Consumer Durables
7. 3° impacts: Cement, Infrastructure
8. Stock picks: HDFCBANK, BAJFINANCE, GODREJPROP (positive); IT exporters if INR weakens

Resources

references/headline_event_patterns.md

Historical Indian market event patterns and reactions.

references/sector_sensitivity_matrix.md

Event type × NSE sector impact matrix.

references/scenario_playbooks.md

Scenario construction templates with Indian market context.