Syed Alin Ali, Saurabh Joshi
The Effect of Domestic Slowdown on Momentum Profitability: Evidence from the Indian Market
We examine momentum profits from April 2014 to February 2020, dividing the aforementioned time span into two sub-periods; the Boom years spanning from 2014 to end of 2016, marked by high optimism and the slowdown years from 2017 till end of 2019 which were marred by sequentially deteriorating economic indicators. Momentum returns were tracked for the 110 odd largest companies by way of market cap and listed on the National Stock Exchange. During the Boom years, fifteen of the sixteen momentum strategies tested gave results that were both economically as well as statistically significant, thus confirming to the existing literature. However, the study also found five of the momentum strategies to still give results that significantly outperform the benchmark index during the subsequent period of economic decline and turmoil, thus providing some evidence supporting the persistence of momentum profits even during conditions when the macro environment might seem unfavorable.
Momentum Strategies, Economic Slowdown, Investment Strategies, Indian Stock Market, Momentum
Cite this paper
Syed Alin Ali, Saurabh Joshi. (2022) The Effect of Domestic Slowdown on Momentum Profitability: Evidence from the Indian Market. International Journal of Economics and Management Systems, 7, 13-31