This is a list of Nifty 100 stocks with momentum and low volatility for Feb. 2019 I will publish this list on a monthly basis. Readers interested in momentum investing combined with low volatility can use this as a starting point. This is the previous month’s list: Nine momentum stocks with low volatility for 2019. This time I have used both daily and monthly returns (last one year) for screening.
What is momentum investing? Invest in stocks that have moved up considerably over the past 6-12 months hoping that the trend will continue into the future (for a short period). Relevant data and links for the Indian and US markets is discussed here: Momentum Stock Investing in India: Does it work?.
What is low volatility investing? Low volatility investing refers to identifying stocks with low price fluctuations and investing in them. Again this is based on past evidence: Low volatility stock investing: Does it work? Higher returns at lower risk?
As discussed in the first link above, there is a close connection between momentum investing and low volatility. In fact, most momentum stock picking strategies also include a way to filter out stocks based on volatility. They prefer stocks that have moved up in the past (= momentum) with low volatility. Another idea that is closely related is to hunt for stocks that have stayed close to their all-time price highs.
Warning: Whether you choose stocks with momentum or low volatility or both, it is important to recognise when to sell the stocks. This kind of trend following requires serious levels of discipline and commitment. You should be able to buy a stock without question and sell it without question in a short period of time if it no longer has enough momentum and/or low volatility. If you get distracted by the valuation of the stocks, their ROE etc and hesitate or buy more than necessary it will not work. Please do not blindly use this list to buy and clutter your portfolio. This list will evolve in method with time. So be prepared for this. Do your own research about momentum and low volatility investing!!
Momentum Investing in India
You can watch this video version of the above-linked post to get an introduction to momentum investing
Procedure followed (a similar procedure was followed for monthly returns too)
To play it safe, I would like to stick with the Nifty 100. The full list can be downloaded from below.
1: Download last one-year stock price from moneycontrol. You can do this for any stock with this tool: Automated Earnings Power Stock Analysis With Screener.in data
2: Calculate daily returns (usual and logarithmic)
3: Calculate standard deviation in daily returns (usual and logarithmic). This is the volatility.
4: Calculate CAGR of the last year. This is the momentum. Note that BSE uses CAGR/volatility as the momentum score
5: Calculate how many daily returns were positive. This is a measure of the quality of the momentum.
6:We will short-list only those stocks with a positive return.
7: We will demand that at least half the daily returns should have been positive to obtain the final list. Out of the 247 daily returns, at least half should have been positive.
List of stocks with momentum and low volatility (Feb 2019)
It also shows data from the previous listing for comparison. Stocks in red have dropped out of the current list. This is based on daily returns.
|2019 Feb||2018 Dec|
|Britannia||Britannia Industries Ltd.|
|Colgate||Colgate Palmolive (India) Ltd.|
|Dabur||HDFC Bank Ltd.|
|HCL Tech||Hindustan Unilever Ltd.|
|HDFC Bank||Housing Development Finance (part of monthly return list)|
|Infosys||Kotak Mahindra Bank Ltd.|
|Kotak Mahindra||Marico Ltd. (part of monthly return list)|
|P and G||Pidilite Industries Ltd.|
Listing based on monthly returns
Stocks marked common to both monthly and daily return based lists are shown in green. It is better to focus on those.
- Asian Paints Ltd.
- Britannia Industries Ltd.
- Colgate Palmolive (India) Ltd.
- Container Corporation of India Ltd.
- Dabur India Ltd.
- HCL Technologies Ltd.
- Housing Development Finance
- HDFC Bank Ltd.
- Hindustan Unilever Ltd.
- Infosys Ltd.
- Larsen & Toubro Ltd.
- Marico Ltd.
- Procter & Gamble Hygiene & Health
- Tech Mahindra Ltd.
- Titan Company Ltd.
- Wipro Ltd.
Download the full list of momentum stocks with low volatility for Feb 2019 (excel data filters are “on” as mentioned in the above steps. Clear those if you want to screen on your own)
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