Analysis of the Momentum Investing Strategy and Volatility-Based Strategy in the Indian Stock Market

Abstract

This study examines the influence of demographic factors—specifically age, experience, and risk tolerance—on investor preferences for stock investment strategies, focusing on momentum and volatility-based approaches. Using primary data from a survey of 300 investors and secondary data of top-performing companies in the Indian stock market from 2013 to 2024, we apply multinomial logistic regression to analyse stock preferences in relation to volatility. Additionally, we assess whether momentum and volatility-based investment strategies outperform the NIFTY 50 index between 2018 and 2024. The findings reveal that younger investors tend to favour high-risk, high-reward stocks, such as momentum and volatility stocks, while older investors exhibit a preference for low-volatility, safer investments. Our research confirms that both momentum and volatility strategies yielded superior returns compared to the NIFTY 50 index, driven by high-growth stocks like Adani Enterprises and Tata Steel. This study contributes valuable insights to financial advisors, suggesting that investment strategies should be tailored based on investor age and risk appetite to optimise returns in a dynamic market environment.