International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal

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Riding the Trends: Momentum and Contrarian Strategies in Bombay’s Stock Market

Author(s) Mr. ER KARTHIK, DR. MARTHA SUCHARITHA
Country India
Abstract ABSTRACT
This study examines the effectiveness of momentum and contrarian investment strategies in the Indian stock market using sectoral indices from the Bombay Stock Exchange (BSE). Momentum strategies involve buying recent winners and selling losers, while contrarian strategies take the opposite approach. Using a dataset of 367 stocks across nine key sectors, this research analyzes short-term (1-year), medium-term (5-year), and long-term (10-year) returns to assess the persistence of these strategies. The findings indicate that momentum effects are significant in the Indian market, with top-performing stocks in the 1-year period continuing to generate superior returns over the long term. Contrarian strategies, however, exhibit effectiveness primarily during market downturns, aligning with behavioral finance theories such as overreaction and herding behavior. Sectoral analysis reveals distinct performance trends, with Consumer Non-Cyclical and Communications sectors outperforming, while Financial and Utilities sectors lag. Regression analysis confirms a statistically significant relationship between short-term and long-term returns, supporting the viability of momentum investing in India. The study provides insights for investors on strategic portfolio allocation and highlights the impact of market inefficiencies and behavioral biases on stock performance.
Keywords Momentum investing, Contrarian strategy, Indian stock market, Sectoral analysis, Behavioral finance, Market inefficiencies, Portfolio allocation, Regression analysis, Investment strategies, Stock performance.
Published In Volume 7, Issue 2, March-April 2025
Published On 2025-03-18
DOI https://doi.org/10.36948/ijfmr.2025.v07i02.39245
Short DOI https://doi.org/g89vvx
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