Nifty200 Momentum 30 outruns Nifty 50; Trent, PSU counters lift index

Momentum investing tends to thrive in a market rally, where the markets and stocks trend upwards.

The Nifty200 Momentum 30 index emerged as one of the top leaders in amongst various indices, across broader markets, sectoral indices, as well as strategy indices. So far in trade, the index has jumped two percent, as compared to the benchmark Nifty 50's gain of half a percent.

The index aims to the performance of 30 high momentum stocks across large and mid-cap stocks which comprise the Nifty 200 index.

Momentum investing is a strategy that focuses on buying stocks or assets that have shown strong performance in the recent past, with the expectation that this trend will continue.

Investors using this approach believe that stocks with upward momentum will continue to rise, while those with downward momentum are likely to keep falling, driven by market sentiment and behavioral biases.

Momentum investing tends to thrive in a market rally, where the markets and stocks trend upwards. This investing strategy can significantly amplify returns during a bull run. As a result, the Nifty200 Momentum 30 Index outperformed the Nifty 50 Index over longer periods.

While both fell 3.5 percent in the past week, the Nifty200 Momentum 30 gained 33 percent year-to-date versus Nifty 50's 14.7 percent. Over one year, it surged 58 percent, more than double Nifty 50's 27.8 percent rise.

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The top gainer on the index was Tata group's retail player Trent, the operator of Westside and Zudio.  Dixon Technologies, REC, HAL, and PFC were the other leaders in the pack.

Trent shares surged five percent intraday, after the Tata group firm launched a new standalone store format, Zudio Beauty, marking its entry into the mass-priced beauty segment. The move positions Zudio Beauty in direct competition with established players such as Hindustan Unilever's Elle18, Sugar Cosmetics, Health & Glow and Colorbar.

Dixon Technologies stock jumped over five percent as well, becoming a key index contributor. While its performance was flat over the past week, investor sentiment improved after analysts praised its efficient working capital, capital allocation, and asset turnover. Despite concerns over its high valuation with a TTM PE of 198, Motilal Oswal remains bullish, citing strong industry growth, expansion potential, and top-tier RoIC.

The other top gainers in the top five were all public sector companies, including power financiers Power Finance Corporation (PFC) and REC. Both stocks surged after Motilal Oswal initiated coverage with 'buy' ratings, setting target prices of Rs 560 for PFC and Rs 630 for REC, indicating substantial upside potential.

These firms are positioned as key players in India’s energy boom, supported by a massive Rs 42 lakh crore investment opportunity from anticipated power generation capacity expansions.

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