Ok. So, exactly, did I go about doing that.
Step 1: Start with Nifty 500 universe (501 companies)
Step 2: Eliminate all those companies which have a listing history of
A small thread on momentum investing and how I practice it.
I use the Nifty 500 universe for selecting my momentum stocks. Nifty 500, as the name suggests, has 500 companies in it. WRONG !!!! It actually has 501 companies. Yes, I double-checked 🙂 So, these 501 companies is
Ok. So, exactly, did I go about doing that.
Step 1: Start with Nifty 500 universe (501 companies)
Step 2: Eliminate all those companies which have a listing history of
Step 3: For the remaining 476 companies, I computed their last 12-month rolling price returns (meaning, comparison of their price as on March 31, 2022 as compared to that as on March 31, 2021, and then computing the %
a) Average return of all the 476 companies was 43.27% (meaning if their average price as on March 31, 2021 was 100, then their average price as on March 31, 2022 was 143.27)
b) Out of these 476 companies
c) Out of the balance 336 companies, 46 companies gave single-digit returns
d) Out of the balance 290 companies, 101 companies gave a return between 10-30%
e) Out of the balance 189 companies, 55 gave returns between 30-50%
g) The remaining 58 stocks gave 100+ % returns
Step 4: I selected 50 stocks with the highest returns.
Obviously these came from the category (g) mentioned above. In other words, out of the total 58 stocks
These top 50 stocks had an average return of 253% (as compared to the average 43% that I mentioned above for the whole Nifty 500 universe) -- see table
Step 6: Now all I have to do is wait for 1 full quarter. I have bought right. Now I need to sit tight. Till June 30, that is.
Step 7: On June 30, I will repeat this whole exercise, by looking at the rolling 1-year
Step 8: Those stocks that have got thrown out of the top-50 club, will be sold/ exited and the new ones that have entered the top-50 club, will be bought afresh.
Step 9: The weights of all the stocks will be re-adjusted back to 2%
The logic behind doing this is that, the fact that this stock (despite falling 25%) is still in the top-50
If the stock
Parting thoughts ==> If you have a decent capital, this is a very simple DIY
Oh! and I forgot to mention another very important point. In addition to doing all this hardwork (which takes all of 30 mins once every 3 months 😄), I also do a #Nifty FUT overlay
