Momentum and value are two of the most widely discussed approaches. One follows strength in price and earnings trends; the other focuses on paying less than a company is worth.
This article sets out what each style really means, how they differ, where they can fit into an Indian portfolio, and how to apply them with discipline rather than promotion.
What Momentum Investing Actually Is
Momentum is about riding strength. In plain terms, you shortlist shares that have shown persistent positive trends and improving business traction and you stay with them while that strength holds.
The logic is behavioural: markets can under-react at first, then continue to reward improving stories as more investors notice them. A rules-based approach that monitors trend breaks and position sizing is essential so you can exit without second-guessing yourself.
What Value Investing Actually Is
Value focuses on buying companies for less than their assessed worth. The aim is to identify businesses where prices do not reflect fundamentals such as asset quality, cash flows and governance discipline.
A value investor accepts that recognition can take time and prefers a margin of safety over fast moves. The craft lies in separating genuinely undervalued companies from those that are cheap for good reason.
How These Styles Differ
Momentum rides continue to strengthen in prices and earnings, while value hunts mispriced quality waiting for recognition
Source of Returns
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Momentum: Seeks to capture continuing strength after a positive break in price or results.
- Value:Seeks to benefit when mispricing narrows and quality is recognised.
Holding Behaviour
How long you hold positions and how quickly you adjust when signals change.
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Momentum: Typically adjusts faster because the thesis is tied to trend persistence.
- Value:Tends to be steadier, because the thesis is tied to business worth.
Temperament Required
Momentum calls for quick, disciplined action; value rewards patience and steady conviction.
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Momentum: Comfort with quick trims and re-entries if trends change.
- Value:Patience to wait while markets close the gap between price and worth.
Choosing a Style That Suits You
Before you pick, anchor on three personal filters:
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Time horizon: If you review positions frequently and can act quickly, momentum may fit your rhythm. If you prefer fewer, deeper decisions, you may feel more natural.
- Volatility comfort:Momentum can move faster both ways; value can test patience while the thesis plays out. Pick the ride you can sit through.
- Process discipline:The key is not the label, but whether you have simple, repeatable rules for entry, exit and sizing.
Where Baskets and Strategies Can Help
Suppose you want to practise investment styles without stock-by-stock selection from day one. Many brokers provide thematic or rules-based baskets that mirror a style, making it easier to apply a framework consistently while keeping direct ownership of shares.
You will also find many mutual fund houses that have the funds based on these two style of investing.
Treat these as building blocks rather than shortcuts; understand the selection rules, rebalance method and how the basket is meant to be used.
Due Diligence Steps That Work for Any Style
Whether you lean momentum or value, run these common-sense checks before you buy:
- Business clarity:Can you explain what the company does and how it makes money, in one line?
- Governance signals:Look at disclosures, board quality and any related-party dealings the company reports.
- Earnings quality:Prefer cash-backed growth over headline-only stories.
- Balance sheet:Understand debt and capital allocation policies.
- Sizing discipline:Keep position sizes aligned to your comfort so you can hold through normal noise.
Risk management: Where Styles Often Fail
Momentum strategies can stumble when trends reverse suddenly. Value strategies can underperform if the thesis is wrong or if a business stays cheap for structural reasons. In both cases, the usual culprit is not the style but weak execution: no written rules, no risk limits and decisions driven by headlines. The fix is boring and practical: document your rules and follow them.
Blending Styles Without Overcomplicating It
Many investors hold a core portfolio built on value principles and allocate a smaller, clearly ring-fenced sleeve to momentum. The blend can make the journey smoother across different market phases. If you explore this route, separate the sleeves on day one, set distinct rules for each and avoid moving positions between them on impulse.
Final Thoughts
Understanding momentum and value is less about theory and more about behaviour. Pick the approach that matches how you think and act, use simple rules you can repeat and size positions so you can hold them through inevitable swings. That is how investment styles in India become tools for clarity, not sources of pressure.