• By Jimeet Modi, Founder & Group CEO, SAMCO Group, October 2026

Every month, a momentum system asks every market it can see the same blunt question: over the past year, who has been winning and who has been losing? It does not read vision documents. It does not weigh demographics, reform announcements or the length of a runway. It looks at prices, ranks them, and acts.
We run momentum strategies for a living, and we follow what the system says even when we would rather not. So I asked our research team to put India through that machine as if India were just one more ticker on the screen. The answer was sobering.
Of the 47 national stock markets in the MSCI All Country World Index, India ranks 44th on the standard twelve-month momentum measure (Exhibit 1). In 2026, India’s market has fallen 15.9% in US dollars to 7 October, while the MSCI All Country World Index has risen 14.3% and the MSCI Emerging Markets index 24.9%. In the twelve months to 30 September, 39 of the 47 markets rose in dollar terms. India was not one of them.
India has been near the bottom before, but not for this long since our data begin in 2001. In the 23 years from December 2001 to July 2025, India spent a total of seven month-ends in the bottom decile of this ranking, the five lowest-ranked markets. Since August 2025, it has spent eleven of fourteen, including the last eight in a row (Exhibit 2).
This essay makes one argument in five steps. India has become the anti-momentum trade. A market can slip out of the bottom decile for mechanical reasons, but lasting exits tend to come in one of two broad ways: it becomes cheap enough to own, through lower prices or through years of earnings growth while prices stand still, or its story changes until it is too attractive to ignore. India is not cheap, and at today’s global interest rates the valuation route implies a painful de-rating, in price or in time. That leaves perception, and changing perception requires something India has rarely felt the need to do: actively court global capital. I call it peacocking: substantive reform, made visible to the investors who price it.

Momentum is among the most persistent findings in finance: assets that have outperformed over the past year have tended to keep outperforming for a while, and those that have lagged have tended to keep lagging. It shows up in stocks, currencies, commodities and country indices, and more weakly in bonds. AQR’s study “Value and Momentum Everywhere” (Journal of Finance, 2013) found that ranking 18 developed equity markets on their past-year returns, then owning the top third and shorting the bottom third, earned about 8.7% a year from 1978 to 2011.

Our own replication across today’s 47 MSCI ACWI markets since 2002 points the same way. Rebalanced monthly, the top momentum decile compounded at 14.4% a year in dollars and the bottom decile at 6.7%, against 9.8% for an equal-weighted basket of every market. Most of that spread came from the winners. On their own, the losers lagged the average market only modestly, and not by a statistically significant margin; the losers that kept losing were the expensive ones, as the next section shows.
The mechanics of what this means for India are simple. A global long-short momentum fund, long the top decile or quartile and short the bottom, would by construction be short India today. A long-only allocator running the same signal would simply own none. That is not a claim about what any particular fund is doing. It is a description of what the signal says.
The positioning data suggest the discretionary world has reached a similar place by a different road. HSBC, which had upgraded India to neutral in July, estimated in August that more than 80% of active global emerging-market funds were underweight India, against fewer than 20% a decade ago. BofA Global Research’s August survey of Asian fund managers found India the region’s least-preferred market, at a net 32% underweight.

Momentum rests on one simple proposition: what has been underperforming tends to keep underperforming. Not forever, and not in a straight line, but often for long enough to matter. There is, however, an exception. That exception is the whole story.

If losers kept losing forever, their share of world markets would shrink towards nothing. That does not happen. Part of the reason is mechanical. A momentum ranking is relative: a market climbs out of the bottom decile whenever its trailing return improves against everyone else’s, because it recovers, because other markets stumble, or simply because its worst months drop out of the twelve-month window. For India, that arithmetic runs the other way for now. If its prices simply stood still, its momentum return would fall to about −15% by November, as September’s fall enters the measure and last autumn’s highs become the starting point.
But a ranking that turns is not the same as losing that stops, and that is where valuation comes in. A pure momentum strategy does not care about price: it keeps shorting a loser for as long as it keeps losing. As a market falls, though, it gets cheaper. Its dividend yield rises and its multiple compresses. At some point it becomes cheap enough that staying short is no longer prudent for anyone who also looks at value.
This is why sophisticated global allocators rarely run momentum on its own. Across country equity indices, AQR’s research, which measured value by book-to-market, found value and momentum to be negatively correlated, at about −0.35, so the two hedge each other. For country indices from 1978 to 2011, a portfolio combining them earned a Sharpe ratio of 1.16, against 0.73 for momentum alone and 0.61 for value alone. (That sample ends in 2011; I return to the more recent record below.) In such a portfolio, a market in the bottom momentum decile is taken off the short list when its value score becomes strong enough to offset its momentum score. The price fall that put it on the short list is the very thing that eventually takes it off.
We tested a version of this, using dividend yield as the measure of value because it can be calculated the same way for every market in the ranking, for as long as it has been ranked. Exhibit 3 takes every month-end at which a market sat in the bottom momentum decile between December 2001 and September 2026, 1,490 market-months in all, and splits them by how expensive the market was at that point, measured by dividend yield. On average, the markets that were already cheap stopped underperforming; three years later they were 9.4% ahead of the average market, although the typical cheap loser still trailed slightly, by a median 3.5% after three years. Over the full sample, the expensive ones kept falling behind on every measure: on average by 3.9% after one year, 8.4% after two and 10.2% after three, and by more at the median. Counting each episode once, from the month a market entered the decile, the gap is smaller but points the same way: over three years, expensive losers trailed by a median 7.7% while cheap ones were 0.6% ahead, and 58% of expensive episodes lagged against 49% of cheap ones.
The pattern is sharper for expensive markets that had already spent three months or more in the bottom decile, as India has: they trailed the average market by a median 8.4% over the following year and 15.0% over two (60 episodes in 22 countries). We added that cut after looking at India’s situation, so it is a check rather than a discovery. It is weaker at the moment a market first enters the decile, when expensive markets lagged by a median 2.4% over the next year, and since 2009 they have not lagged on average at that point at all, a weakness I return to below.
Valuation does not get a market out of the bottom decile any faster. In the same data, expensive losers left the decile sooner than cheap ones: a median stay of one month against two, and only about one expensive stay in eight lasting six months or more. What separated them was what came next. Over the full sample, the typical expensive loser went on lagging for years after entry, long after most had left the decile, while cheap ones, on average, stopped falling behind. India’s current stay, eight months and counting, is already unusual for an expensive market.

The gap is economically large but statistically modest, because 25 years is not a long sample for country data. Over one and two years, it is similar when valuation is measured against each market’s own history rather than against other markets. A 1997 IMF study pointed in the same direction from a different angle: national markets that had lagged over the previous three years tended to outperform over the next three.
In plain terms, a market can leave the bottom decile at almost any price, but the losing has tended to stop when the price was right. Which brings us to a harsh reality.

The first thing the system reveals when it looks at India alongside everyone else is this: India is the only market in the world index that sits in the bottom decile on both momentum and dividend yield (Exhibit 4). The other four markets in the bottom momentum decile, namely Indonesia, China, Qatar and Kuwait, all offer higher dividend yields. India’s trailing dividend yield, 1.41% on our measure and 1.34% on MSCI’s published figure, is among the four lowest of the 47, alongside those of the United States, Taiwan and Korea, the markets most associated with the AI boom. Korea and Taiwan top the momentum table. India is priced like the leaders and trading like the laggards. On an equal-weighted blend of its momentum and dividend-yield ranks, India comes 47th of 47.

Nor is India cheap against its own history. In early September, the latest reading in our dataset, the median stock in the Nifty 750 traded at 27.5 times its expected earnings for the next twelve months, about 45% above its 2014–19 average of 19 times. Adjusted roughly for the broad market’s fall since then, it is about 26 times today. On trailing earnings, the median multiples are 32.6 times for the Nifty 750, 36.9 times for midcaps and 33.2 times for smallcaps (Exhibit 5).
Why, then, is there a widespread perception that Indian equities have become cheap? One reason is that the number most often quoted is the Nifty 50’s trailing P/E, which NSE published at 19.0 times on 8 October, the lowest reading in two years. That figure is weighted by market value, and the largest companies carry lower multiples than the typical listed share. The headline is not wrong; it is simply not representative. Nor are Indian equities cheap relative to the rest of the world. On MSCI’s own figures, MSCI India traded at 18.6 times forward earnings on 30 September, against 9.7 times for MSCI Emerging Markets, while DBS expects India’s earnings to grow 7.4% in 2026 against 71.1% for emerging markets.

Now add the discount rate.
From 2014 to 2019, the last stretch before the pandemic distorted everything, the median Nifty 750 stock traded at about 19 times forward earnings and the US 10-year Treasury yield averaged 2.3%, ranging between 1.4% and 3.2%. The median stock’s forward earnings yield, the inverse of its P/E, sat about 3 percentage points above the Treasury yield. That cushion was a rough gauge of the extra return a global investor was being offered for owning a typical Indian share instead of the world’s benchmark risk-free asset.
This month the Treasury yield has traded around 5.2–5.3%, and on 5 October it closed at 5.31%, its highest since May 2002. The cushion has not merely narrowed. It has inverted. Adjusted roughly to today’s prices, the median Indian stock offers a forward earnings yield of about 3.9%, roughly 1.4 percentage points below the Treasury, and the gap has been negative at every month-end since July 2023 (Exhibit 6). The index most foreign investors are measured against looks less extreme but tells the same story: at 18.6 times forward earnings, MSCI India’s earnings yield is about 5.4%, roughly level with the Treasury. For the index, the cushion has gone; for the median stock, it has inverted.

So, the arithmetic the question demands. If the median multiple was around 19 times when the Treasury yielded 2–3%, what should it be with the Treasury at around 5.3%? Restoring the 2014–19 gap requires an earnings yield of about 8.3%, which is a median P/E of about 12 times: 56% below the 27.5 times of early September, and about 54% below the roughly 26 times implied by today’s prices (Exhibit 7). Put the other way round, for the early-September multiple to fit the old relationship, the US 10-year would need to yield 0.6%.
I want to be careful here. This is arithmetic, not a forecast. Comparing an equity earnings yield with a nominal bond yield has well-known flaws; AQR’s “Fight the Fed Model” (2003) showed that the comparison describes how investors set prices better than it predicts returns. Nor has the relationship held in India’s own data: since 2014 the median earnings yield has not moved with the Treasury yield, and over the period as a whole the two have trended in opposite directions. The table measures the size of the gap, not a likely path. So we ran the arithmetic three ways. Against US real yields, with 10-year inflation-protected Treasuries at about 2.9%, close to their highest since 2008, the required median multiple is about 13 times. Against India’s own 10-year government bond, which has barely moved (7.29% today against a 7.48% average in 2014–19), it is about 19 times, still a de-rating of 25–30%. There is no anchor on which the median Indian stock looks cheap.

Nor does a de-rating have to arrive as a crash. It can arrive as time. If the median company’s earnings compounded at 12% a year, faster than DBS expects for the next two years, while its share price went nowhere, it would take two and a half to three years to reach the domestic-anchor multiple and about seven to reach the Treasury-anchor multiple. That is the ominous part. The valuation route could take one of two speeds: a sharp fall, or years of flat prices. Neither is a path anyone would choose.
There is a comfortable belief, often repeated, that Indian equities have corrected and are therefore cheap. The data do not support it. A fall in price is not the same thing as value. India has corrected from expensive to less expensive. It has not corrected to cheap.

The first step in solving any problem is recognising that there is one. A common explanation for India’s underperformance is that this is a normal correction, and that global capital is temporarily distracted by the AI trade. Both halves of that explanation are mistaken: this is not a normal correction, and AI is unlikely to be a passing distraction.
This is not a global sell-off. The MSCI All Country World Index is up 14.3% this year and the MSCI Emerging Markets index 24.9%. Brazil is up 35%, Colombia 52%, Peru 38%, Poland 26% and Greece 21%, none of them an AI story. Of the 47 markets, 34 have risen in 2026; India ranks 46th. Even measured in rupees, the MSCI India index is down 9.5% this year; the rupee’s slide to near-record lows against the dollar deepens that to 15.9% for a foreign investor. What India is experiencing is idiosyncratic: a risk specific to India, much of it, I would argue, of our own making.
Nor is AI likely to prove a passing distraction. India has managed to land on the wrong side of both branches of the AI decision tree. If AI wins, India’s large-cap index has little exposure to it. J.P. Morgan, cutting India to neutral in April, cited “limited exposure to next-gen tech” and noted that India’s large-cap index has “minimal AI, datacenter and semiconductor representation”. Worse, India’s largest technology exporters, its IT services companies, are widely seen as exposed to disruption by AI; the Nifty IT index has fallen 26.8% this year to 8 October.
And if AI disappoints, the money has somewhere else to go. On 5 October, J.P. Morgan’s Latin America equity strategists moved Brazil back to overweight, chiefly on election and interest-rate grounds, adding that “Brazil has the advantage (or disadvantage) of being the Anti-AI market, which is kind of an EM hedge.” In other words, some strategists now see Brazil as the hedge within emerging markets if the bet on artificial intelligence sours. India is neither the AI trade nor the hedge against it. That is our failure, not the market’s.
Accepting this requires a culture in which saying so is permitted. Too often, people who point out errors risk being labelled anti-national. An Indian who offers constructive criticism in order to improve things is not anti-national. Such criticism is the opposite of disloyalty. Markets, like countries, improve only when their errors can be named. A market that will not hear criticism hears it anyway, in its prices.

Global capital has rarely had more choice. It can own the AI build-out in Korea and Taiwan, the anti-AI hedge in Brazil, corporate-governance reform in Japan, or a 5.3% US Treasury yield with no equity risk at all. We cannot be arrogant enough to believe that we are the most beautiful option and that capital will therefore come to us anyway.
A peacock is naturally beautiful. It still displays. India has real attractions: its growth, its demography, the depth of its entrepreneurship. But many of us have grown used to assuming that capital will come regardless. I have heard television anchors say it many times:

That sentence is the clearest evidence I know that many of us stopped respecting capital some time ago, and chose arrogance over humility. Capital is not a supplicant. It is a guest that can leave, and in 2025 and 2026 it has. Foreign portfolio investors have withdrawn ₹4.58 lakh crore from Indian equities since January 2025, more than the ₹3.86 lakh crore they invested in the nine years from 2016 to 2024 combined (Exhibit 8). Their share of the market has fallen to 15.1%, the lowest in 69 quarters. India’s weight in the MSCI Emerging Markets index has nearly halved, from 20.0% in July 2024 to 10.65% in September 2026.

Japan and Korea show what peacocking looks like. In March 2023, the Tokyo Stock Exchange asked listed companies to manage with an explicit eye on their cost of capital and share price, and from January 2024 it began publishing the names of those that responded. The share of Prime-market companies trading below book value fell from 50% in July 2022 to 27% in March 2026. The year before, Japan’s prime minister had stood in the City of London and asked investors to “invest in Kishida”.
Korea launched a Corporate Value-up Programme in February 2024 to tackle the “Korea discount”, scrapped a planned tax on investment gains in December 2024, and amended its Commercial Act to make directors answerable to shareholders. When its finance ministry proposed, on 31 July 2025, to widen the capital-gains tax net, the KOSPI fell 3.88% the next day. When the proposal was withdrawn six weeks later, the index closed above 3,400 for the first time. Korea’s rally owes a great deal to the memory-chip cycle, and policy alone does not explain it. But the episode suggests how quickly capital prices a signal, in both directions.
What would peacocking mean for India? Not a marketing campaign, but reform of substance that global investors can see. Three things.

Stop being penny-wise and pound-foolish with capital
India now taxes foreign investors’ gains and trades more heavily than nearly every market a global allocator would compare it with. A foreign portfolio investor pays no capital gains tax on listed shares in the United States, the United Kingdom, Hong Kong, Singapore, Taiwan or Saudi Arabia; generally none in Japan; none below a 25% holding in Korea; and none on A-shares in China since 2014. In India, absent treaty relief, the same investor pays 12.5% on long-term gains above ₹1.25 lakh and 20% on short-term gains, plus surcharge and cess, and a 0.1% securities transaction tax on both the purchase and the sale (Exhibit 9). Of the twelve markets we compared, India is the only one that levies both a meaningful capital gains tax on foreign portfolio investors and a transaction tax on both sides of the trade.

On equity gains, the direction of travel since 2018 has been one way. Long-term gains, exempt from 2004 until 2018, are taxed at 12.5% today. Short-term gains, taxed at 10% in 2004, are taxed at 20% today. The transaction tax on derivatives was raised in October 2024 and again in April 2026. Securities transaction tax collections rose about seven-fold between FY2015-16 and FY2024-25, from ₹7,350 crore to ₹52,197 crore, largely on the back of a boom in trading volumes; the rate on delivery trades has been 0.1% since 2012.
The government already knows that tax shapes where capital goes. This year it exempted, with effect from 1 April 2026, foreign portfolio investors’ interest and capital gains on government securities from income tax, telling Parliament that it was “recognising the importance of a competitive tax regime in attracting global capital”. Equities were left out.
The revenue is real. So is the cost of capital. In FY2024-25, the securities transaction tax and long-term capital gains tax on equity together raised about ₹1.81 lakh crore. In a simple constant-growth valuation model, at the market’s multiple of about 21.5 times earnings, every quarter of a percentage point added to the return investors demand from Indian equities removes roughly 5% of their value even if companies paid out all their earnings, and more if they pay out less: upward of ₹20 lakh crore at today’s market capitalisation. That is a one-off loss of value while the revenue recurs, so this is not a simple trade-off; it is a question of incentives at the margin. I cannot prove that India’s tax regime adds a quarter-point to the return foreign investors demand. But on a 10% annual gain held for more than a year, India’s tax takes about 1.3 to 1.5 percentage points from a foreign portfolio investor, before any transaction tax. For a dollar-based investor who has also watched the rupee lose about 22% of its value against the dollar in five years, that is not a rounding error.
Would cutting these taxes bring capital back? Perhaps not on its own, and I would not promise it. What it would likely do is take India off the negative list and put it back on the neutral list, and for a market in the bottom decile, neutral is a large improvement. We need a deliberate trade-off between taxing income today and building national wealth over time.
Financial strength and defence strength are twin pillars of any country that aspires to the first rank, and there is no financial strength without buoyant capital markets. At about US$4.8 trillion, India’s market is large in absolute terms, yet India accounts for roughly 1.3% of the MSCI All Country World Index while producing about 3.3% of the world’s output. For an economy with income of about US$2,700 per head, running a current-account deficit and needing capital to invest, that is not a position of strength. We need to go above and beyond to attract capital, not ask more of it than everyone else does.

From regulation to policy-making
The second change is one of posture. In 1896, in a case concerning the audit of a cotton-spinning company, the English Court of Appeal described an auditor’s duty in words every regulator could keep on the desk: “He is a watch-dog, but not a bloodhound.” A watchdog guards the house and barks when something is wrong. A bloodhound hunts.
Markets need watchdogs. They need fraud found and punished, disclosure enforced and systemic risk contained. What they do not need is a state that sets out to choose outcomes for them: which products investors should prefer, how much trading is too much, which risks adults may take. None of this is an argument against catching fraud. It is an argument for intervention that is proportionate, predictable and set out in advance. Markets, like people, value freedom. Rather than imposing choices on markets, the state should build the platforms, set the rules, punish the cheats, and then let markets decide for themselves. The message needs to go out loud and clear: India is in the business of policy-making, not of choosing outcomes for investors.

Sharper five-year plans, measured by outcomes
The third change reaches beyond markets, but it ultimately decides whether India deserves a higher multiple. Indonesia has written its 2045 “Golden Indonesia” vision into law; India has Viksit Bharat @2047. Vision documents are necessary but not sufficient. Beneath them we need a sharper five-year plan, with measurable targets and the discipline to stop doing what does not work.
The record shows why. Manufacturing was about 14.8% of India’s gross value added in FY2025-26, roughly 13.5% of GDP, broadly where it has been for a decade, against a 25% target first set in 2011 for 2022 and since proposed for 2035. India’s share of world merchandise exports has held between 1.6% and 1.8% since 2011.
A plan that cannot say what it will stop doing will end up measuring announcements. Five priorities, in the order that binds.
First, deregulation with an exit rule. Repeal what fails an export or employment test. Complete the state-level operation of the four labour codes, in force nationally since November 2025. Keep cutting quality-control orders that do not serve safety: 143 covered 723 products at the end of 2025. Measure commercial disputes in months, not the 1,445 days the World Bank last recorded for enforcing a contract in India. End subsidies that miss their numbers. Capital, domestic and foreign, should be free to enter and free to leave. Welcoming a cheque without an exit is not an open economy.
Second, paid work at scale. Back labour-using tradables, such as apparel, footwear, food processing, light engineering, tourism and care, scored by formal jobs and export share per rupee of support. On the 2016-17 Economic Survey’s estimate, apparel creates about 80 times as many jobs per unit of investment as automobiles. Women’s paid work belongs inside this target: on ILO estimates, 32% of Indian women are in the labour force, against 54% in Indonesia and 69% in Vietnam.
Third, cities that can take people in: buildable land, predictable density, housing, and municipal governments that can tax and borrow. Firms will not cluster, and women will not take the jobs, where floor space is a negotiation.
Fourth, learning and basic health, measured by grade-level reading and arithmetic, stunting and days lost to illness, not by schools built or schemes launched.
Fifth, cut crude imports. India imports 88.7% of the crude oil it uses, at a cost of US$123 billion in FY2025-26. The levers are efficiency, electric buses and two-wheelers, domestic gas, strategic reserves and nuclear power. Solar does not clear the oil bill. Deterrence, and a domestic supply of ammunition, sensors and drones, should continue on a capped budget.

The argument against
The argument against — and I want to write the strongest version, the version a thoughtful sceptic would make.
First, the messenger has an interest. The group I lead includes a stockbroker that would benefit from lower transaction taxes and lighter limits on derivatives trading, and a fund house that benefits from buoyant markets. Readers should weigh the argument accordingly. Most of the data are public, the valuation series is SAMCO research, and the arithmetic is reproducible; the argument should be judged on that basis.
Second, country momentum, and the value exit itself, have been weaker since 2009. In AQR’s publicly available factor data for developed markets, country momentum, country value and their combination have all earned close to nothing since then. In our 47-market replication, the gap between the top and bottom deciles has averaged about 4% a year since 2009 and about 2.4% since 2016, neither statistically significant, and expensive markets measured at the month they first entered the bottom decile have not lagged on average since 2009. If few investors now run country momentum at scale, why should India’s rank matter? There are two answers. The momentum rank is not only a strategy; it is a description of where capital has been going, and the positioning surveys show discretionary managers in a similar place. And the evidence closest to India’s situation points the same way: since 2009, expensive markets that had already spent three months or more in the bottom decile still trailed the average market by a median 8.1% over the following year and 10.2% over two. Those figures pool overlapping month-ends from 41 episodes; counting each episode once, from the first month it qualified, the median shortfall over the following year is about 5%, and about six in ten episodes lagged.
Third, India itself is an awkward case for the dividend-yield measure. In each of its seven earlier bottom-decile months, India was among the lowest-yielding third of markets, yet over the following year it beat the average market by about 8% on average, outperforming in four of the seven cases. Dividend yield understates value in a market whose companies pay out relatively little, which is why section 3 rests on earnings multiples as well. Measured against its own history, the picture is mixed: the late-2008 rebound began when India’s yield was unusually high for India, but September 2011 and September 2013 looked alike on that measure and were followed by opposite outcomes. Today India’s dividend yield is near the middle of its own range, while its median earnings multiple is well above its 2014–19 average.
Fourth, India’s valuation is now set at home, not in New York. Domestic institutions own more of India than foreign investors do, 19.5% against 15.1%, the widest gap in NSE’s ownership data, which begin in 2001, and they bought a record ₹7.88 lakh crore of equities in 2025. Monthly SIP contributions reached ₹32,297 crore in August. If the marginal buyer is a domestic saver whose alternative is a 7.3% government bond, not a 5.3% Treasury, the Treasury arithmetic is beside the point. This is the strongest objection, and I accept part of it; it is why the domestic anchor in Exhibit 7 gives a gentler answer. But it describes a market with two discount rates: domestic savers pricing India off a bond yield that has barely moved, and foreign investors pricing it off one that has risen by three percentage points. The distance between the two helps explain the flows in Exhibit 8. Domestic money can absorb foreign selling for a long time. It does not change the price at which foreign capital would return, and even on the domestic anchor, the median stock is not cheap.
Fifth, earnings can do the work. Indian companies may grow into their multiples. That is true, and it is the time version of the valuation route described above: two and a half to three years of 12% earnings growth with flat prices to reach the domestic-anchor multiple, about seven to reach the Treasury anchor. It is the gentler path. It is also a path of years without price gains.
Sixth, tax cuts might not bring anyone back. Korea’s surge owes much to memory chips, and Japan’s to forces well beyond its stock exchange’s request. Perhaps. I have not argued that policy alone re-rates a market. I have argued that a market in the bottom decile on both momentum and yield cannot afford to be near the bottom on how it treats capital as well.
None of this makes the conclusion certain. If US yields fall sharply, the arithmetic softens. If Indian earnings surprise on the upside, the time path shortens. The honest summary is that the lasting routes out of the bottom decile run through valuation, by price or by time, or through a change in perception. Markets set the price and the clock. Policy is ours to set, and perception is ours to influence.

What this means now
For investors, the first implication is to drop the idea that India’s correction has made it cheap. Valuations offer less of a cushion than the headline index suggests, and the history in Exhibit 3 suggests that expensive markets in the bottom decile have tended to keep lagging after they leave it, while cheap ones, on average, have not.
The second is to keep two questions apart. Cross-country momentum ranks India against Brazil and Korea. Within India, relative strength still exists stock by stock and sector by sector, and a disciplined domestic momentum process continues to rank Indian companies against one another, whatever the country’s global standing. One is a question about India’s place in the world. The other is a question about which Indian companies are leading.
For policymakers, the implication is the one this essay has argued: the valuation route out of the bottom decile is one nobody would choose, and the perception route has to be built, deliberately and visibly.
Here is a test we will come back to. If this framework is right, then between now and September 2027 India should not spend six consecutive month-ends outside the bottom fifth of the momentum table (the ten lowest-ranked markets) while its median forward P/E stays above 23 times, more than 20% above its 2014–19 average, unless the government first cuts the capital gains tax or the securities transaction tax that foreign portfolio investors pay. Six consecutive months guards against a quirk of the twelve-month window. In our data, a little under a quarter of expensive markets in India’s position did so within a year while staying in the most expensive third of markets, so this is a test the framework can fail. We will report the result in October 2027, whichever way it goes.

Conclusion
India is the anti-momentum trade. The way out through valuation would be brutal: restoring the median stock’s 2014–19 relationship with bond yields would take a de-rating of between a quarter and a little over a half, depending on the yardstick, reached through lower prices, years of flat prices, or both. That is not a path anyone should wish for. The alternative is a change in the perception and narrative of India among global investors, on taxes, on the posture of the state, and on a short list of priorities measured by outcomes rather than announcements. That requires peacocking on a scale this country has rarely attempted. The peacock is beautiful. It is time it displayed.

SOURCES
– MSCI: end-of-day index levels for 47 MSCI ACWI country indices and the MSCI ACWI, World and Emerging Markets indices (USD; net, gross and price); index factsheets, 30 September 2026.
– National Stock Exchange of India: index P/E as published; India Ownership Tracker, June 2026 quarter; Market Pulse, September 2026; closing index levels.
– NSDL: foreign portfolio investor net investment in equity, calendar years 2016 to 2026.
– BSE: all-India market capitalisation. Reserve Bank of India: reference rate. Association of Mutual Funds in India: SIP contributions.
– Union Receipt Budgets, FY2017-18 to FY2026-27; Central Board of Direct Taxes, direct tax collections as on 31 March 2026; Lok Sabha Unstarred Question 166 (20 July 2026); Finance Acts 2004 to 2026.
– Federal Reserve Board, H.15 Selected Interest Rates (US 10-year nominal and inflation-protected yields), and OECD (India 10-year yield), via FRED; TradingView (latest yields).
– Ministry of Statistics and Programme Implementation, national accounts (2022-23 base); Economic Survey 2016-17 and 2025-26; Press Information Bureau; Petroleum Planning & Analysis Cell; World Bank and World Trade Organization data; International Labour Organization modelled estimates.
– J.P. Morgan, LatAm Equity Strategy, “Brazil Back to OW, Downgrading Chile to Neutral”, 5 October 2026; J.P. Morgan India equity strategy, 24 April 2026; HSBC Global Research, 5 August 2026; BofA Global Research, Asia Fund Manager Survey, August 2026; DBS Bank, CIO Insights 4Q26, 29 September 2026.
– AQR Capital Management: “Value and Momentum Everywhere”, Journal of Finance (2013), and the associated public factor data; “Fight the Fed Model”, Journal of Portfolio Management (2003). International Monetary Fund, Working Paper 97/182 (1997).
– Japan Exchange Group / Tokyo Stock Exchange; Financial Services Agency of Japan; Prime Minister’s Office of Japan. Financial Services Commission, Republic of Korea; Ministry of Economy and Finance, Republic of Korea; Korea Exchange.
– Re Kingston Cotton Mill Co (No 2) [1896] 2 Ch 279 (Court of Appeal). Republic of Indonesia, Law No. 59 of 2024 on the National Long-Term Development Plan 2025–2045. Prime Minister’s Office of India, Viksit Bharat @2047.
– PwC Worldwide Tax Summaries (2026 reviews); Deloitte International Tax Highlights 2026; HM Revenue & Customs; Hong Kong Inland Revenue Department; Inland Revenue Authority of Singapore; HKEX Stock Connect Information Book.
DATA NOTES
Country returns are MSCI country indices in US dollars, net total return, from 29 December 2000 (UAE, Qatar and Kuwait from June 2005, Saudi Arabia from September 2014) to 7 October 2026, for the 47 countries in the MSCI ACWI in 2026; the MSCI ACWI, MSCI World and MSCI Emerging Markets indices are the benchmarks. Momentum is the standard 12-1 measure (the return over the past twelve months excluding the most recent month); ranks are taken at month-ends from December 2001 to September 2026, the ranking covers 43 markets from December 2001, 46 from June 2006 and 47 from September 2015, and the bottom decile is the five lowest-ranked markets. Dividend yields are trailing twelve-month dividends derived from MSCI gross and price index levels, calculated the same way for all 47 markets; MSCI’s published factsheet yield for India on 30 September 2026 is 1.34%, against 1.41% on this measure, so using the published figure would move India further down the yield ranking, not up. Event-study figures use every month-end a market spent in the bottom decile, averaged across monthly cohorts, with one-, two- and three-year results using month-ends up to September 2025, September 2024 and September 2023 respectively, so that every forward window ends by September 2026; episode figures count each run of consecutive bottom-decile months once, from its first month; results at first entry and for markets with three or more consecutive months in the decile are reported in the text. Valuation data are SAMCO research: the daily median 12-month forward P/E of Nifty 750 constituents from 31 March 2014 to the latest reading (dataset dated 9 September 2026), adjusted approximately to 8 October prices using the Nifty Total Market index, and median and mean trailing P/E as at 8 October 2026 for constituents with a reported trailing P/E; index P/E figures are as published by NSE (8 October 2026) and MSCI (30 September 2026). Flow, ownership, tax and macroeconomic data are from the official sources listed above. Applying today’s index membership to earlier years introduces some look-ahead bias into the historical country analysis. Index returns are gross of fund-level expenses, transaction costs and taxes; returns on any investable fund would be lower by the cost of implementation. This article does not refer to the performance of any SAMCO Mutual Fund scheme. Past performance may or may not be sustained in future.
DISCLAIMER
The information contained herein is intended to help you plan and invest for your financial goals based on your risk profile in a diversified and convenient manner. Investors are advised to consult their mutual fund distributors, financial advisors, and/or tax advisors before selecting any portfolio or making any investment decision. The investor(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice, and shall alone be fully responsible and liable for any decision taken on the basis of information contained herein.
Neither SAMCO AMC, SAMCO Mutual Fund, nor any person connected with them accepts any liability arising from the use of information herein.
For complete details on investment objective, investment strategy, asset allocation, scheme specific risk factors, and more, please read the Scheme Information Document (SID) and Key Information Memorandum (KIM) of the scheme, available at the Investor Service Centres of SAMCO AMC and on www.samcomf.com.
SAMCO Mutual Fund, its AMC, directors, officers, employees, key management personnel and their dependent family members may hold investments in the schemes recommended herein.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Every big innings starts small. A nervous first single. A streaky boundary that barely carries. A young batter walking out to a crowd that doesn't know their name yet. Nobody remembers the first ball of a match-winning knock; they remember the total it became.

Small-cap mutual fund investing can be viewed in the same light. The businesses that may grow into meaningful contributors to a portfolio rarely look impressive at the start. They begin small and unnoticed. Investors who understand the segment, invest with patience and stay invested through market cycles may participate in their journey.

This guide uses cricket to walk through how they work, what the risks are, and how long investors typically need to stay invested.

What Is Momentum Investing?

At SAMCO, we call ourselves The Momentum House, and the name comes from a simple cricketing instinct: good captains don't pick a team on reputation, they pick it on form. A player who was brilliant two seasons ago but has gone quiet recently makes way for someone who is finding the ball, reading the game well and delivering right now.

That's the lens we bring to investing. Rather than picking stocks purely on size, brand recognition or past reputation, a momentum-driven approach looks at what the numbers are saying today (price trends, earnings growth and revenue momentum) to identify companies showing signs of momentum. It's less about who had the best season a while ago, and more about who is playing well this one. This philosophy is central to how we approach investing, and especially to how we think about small caps.

To see what staying “in form” has looked like historically, here is how a momentum-and-quality-screened basket of small-cap stocks has performed relative to the broader small-cap universe over roughly the last two decades:

Understanding the Uncapped Talent: Small-Cap Fund Risk

Every squad carries a player who hasn't had a full international season yet: someone with real match-winning potential, but also the unpredictability of a player still finding their range at this level. Backing that player takes a certain risk appetite and a longer view of where they can get to.

Small-cap stocks occupy exactly this space in a portfolio. These are smaller companies, ranked well beyond the usual large-cap names, with potential for growth as their businesses develop. They can accelerate quickly when conditions favour them, and they can go quiet just as fast. Your own risk appetite decides how much of your batting order you're willing to build around players still proving themselves: those who may offer significant growth potential, but also a wider range of outcomes.

It's worth seeing that range, not just describing it. The chart below tracks drawdowns (how far an index has fallen from its most recent peak) for the Nifty Smallcap 250 and a momentum-quality-screened version of the same universe, over roughly two decades.

Notice the shape: long stretches of recovery, interrupted by sharp, sometimes brutal pullbacks. There was a fall of roughly 70–80% through the 2008 financial crisis, another sharp drawdown of around 50–60% during the 2020 pandemic, and smaller corrections in between. This is what “a wider range of outcomes” looks like in practice. A momentum or quality tilt doesn't exempt a stock, or an index, from these drawdowns; both lines fall together in the sharpest sell-offs. What a disciplined, form-based process can influence is how a portfolio is built and rebalanced through these cycles, not whether declines happen at all.

The lesson isn't to avoid the uncapped player. It's to size the bet appropriately, and to be honest with yourself about whether you can stay at the crease through a 50–70% dip without walking off mid-innings.

Small-Cap Allocation: Building a Full Squad, Not Just One Type of Player

No team wins with eleven aggressive stroke makers and nobody to anchor an innings. The best sides balance stability with intent: different players suited to different match situations, brought together into one XI.

A portfolio needs the same balance. An allocation to small caps can play a role in your overall portfolio, but it works best as part of a wider squad, sitting alongside large-cap stability and mid-cap growth, not as a replacement for either.

Playing the Long Format: Small-Cap Holding Period

T20 rewards instant impact. But the innings that get remembered, the ones that define a career, are usually built over a full match, sometimes over a full series, not one explosive over. Selectors backing a promising young talent do it with patience, judging them over seasons, not a single failure or a single flash of brilliance.

Small-cap investing asks for that same patience. It's built for investors thinking in terms of a full career, not a single innings, which is why SAMCO suggests an ideal holding period of around 7 years for small-cap exposure.

The numbers offer an interesting perspective. Looking at rolling daily returns of the Nifty Smallcap 250 Momentum Quality 100 Index against the broader Nifty Smallcap 250, the share of instances in which the index outperformed has historically risen as the holding period lengthened

This is historical index-level analysis, not a guarantee. But the pattern is consistent with the broader idea: a short innings leaves more to chance, while a longer one allows more time for the effects of quality and momentum to be reflected in the numbers.

Building the Innings: SIP vs. Lumpsum in Small-Cap Funds

No batter walks out and swings at the first ball hoping to clear the ropes. Good innings are built delivery by delivery: a single here, a well-placed two there, the total climbing with intent rather than luck.

A Systematic Investment Plan (SIP) works with similar discipline. Instead of trying to time one large lumpsum entry, essentially betting the whole innings on one well-timed shot, you invest a fixed amount regularly and let time and consistency play out across market cycles, not just one match. It's a quieter way to bat, and can be one way to build an investment journey over time.

Staying at the Crease When the Pitch Gets Difficult

Every long innings has a spell that doesn't go to plan: a testing spell of bowling, a rough patch of form, an over that simply won't yield runs. The batters who survive it, rather than throwing their wicket away in frustration, are usually the ones still there when the total looks very different by the end.

Small-cap markets test investors in exactly this way. Volatility isn't a sign the strategy has failed; it's part of the format. Staying invested through such phases can be important for investors with a longer investment horizon, while recognising that there is no assurance that the innings will finish big or that losses will be recovered.

Where This Comes Together: The SAMCO Small Cap Fund

This is the thinking behind the SAMCO Small Cap Fund, a fund built entirely around The Momentum House view of the market, and designed for investors willing to back a small start long enough to see it become something bigger.

The fund uses SAMCO's proprietary C.A.R.E. momentum strategy, reading Cross-sectional, Absolute, Revenue and Earnings momentum, to identify small-cap companies (broadly, those ranked 251st to 750th by market capitalisation) showing current momentum, based on its investment approach. It is benchmarked against the Nifty Smallcap 250 TRI, carries a Very High risk rating (as on Sept-26) in line with the small-cap category, and is built with a long-term view: an ideal holding period of around 7 years.

You can start with a lumpsum investment of ₹5,000 or an SIP from ₹250. A 1% exit load applies on redemption or switch-out within 30 days of allotment; there is no exit load thereafter. Every big innings starts with a first run. The question is whether you're willing to stay at the crease through the ups and downs of the game, while understanding that investment outcomes are not guaranteed.

To know more, please read the Scheme Information Document (SID) and Key Information Memorandum (KIM) carefully.

Explore the SAMCO Small Cap Fund →

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Samco Mutual Fund | MF/077/21/03

Every wedding invitation opens with his name. Every new office, every new ledger, every first brick laid on a new house - Ganesha is invoked before any of it. So, what is the story behind it?

As the story goes, Shiva and Parvati’s two sons agreed on almost nothing. Kartikeya, the commander of the devas’ armies, mounted on a peacock, was built entirely for speed. Ganesh, heavier and slower, rode a mouse and appeared to be in no apparent hurry to be anywhere.

When the brothers disagreed over who deserved to be worshipped first - a title that meant being invoked before every undertaking, for the rest of time, their parents proposed a contest: whoever could circle the universe three times the fastest would win.

Kartikeya didn’t wait for the sentence to finish. He was off on his peacock, circling the cosmos at exactly the speed his reputation promised.

Ganesh’s approach, as the story goes, was different. He got down from his mouse, walked around his parents three times, and sat back down. By the time Kartikeya returned, certain that he had won, he found that his brother had already been declared the winner.

The explanation, as it is told is simple: his parents were the universe. Everything that existed, existed because of them. Circling them three times was, therefore, the same as circling everything there was to circle. There was nothing left over.

That is the story behind Prathama Pujya—Ganesha being worshipped first, before anything begins.

What the story is actually arguing

It's tempting to read this as “slow and steady wins” and move on. That interpretation flattens it, and it isn't even accurate, Kartikeya's effort was completely real. He genuinely circled the universe, at genuine physical cost, exactly as instructed. He did not lose because he was too fast. He lost because he answered the question exactly as it was asked, without first asking whether the question itself had a shortcut hidden inside its own wording.

Ganesh, before moving a muscle, worked out what “the universe” actually meant in a way that mattered. That's the entire contest, and it was won before either brother had covered a metre of ground. Speed had nothing to do with the outcome, understanding did.

A festival built for beginnings and the discipline hiding in it

Ganesh Chaturthi is popularly treated as an auspicious time to start things - a new venture, a new home, sometimes even a new investment. That instinct is right, but it's usually applied backwards: people take the “new beginning” part of the festival and skip the part where Ganesh actually earned his position, by understanding the task before he moved on it. Applied to money, that's the more useful half of the story.

A financial goal, like the race, isn’t necessarily about starting fastest. It begins with understanding the actual shape of the goal before committing capital to it. In practice, that looks like a short but unglamorous list.

• Know what you're circling before you start. What's the goal, and by when? How much fluctuation in your investment's value can you tolerate not on a form, but when it's actually happening to your money? How much can genuinely be invested at a regular interval, without strain? Answering this first is the equivalent of walking around the actual universe instead of sprinting past it.

• Patience isn't the same as inattention. Markets will hand out corrections, sudden rallies, and long stretches where nothing appears to be happening at all. Not every market movement requires an immediate reaction. Patience means giving an investment strategy the time it was built for, while still checking periodically, not constantly, that it's still pointed at the original goal.

• Consistency can be a form of discipline. A Systematic Investment Plan is closer to Ganesh's three deliberate circles than to Kartikeya's single sprint: a fixed, modest amount, repeated on schedule, rather than one large bet timed to a moment of confidence. It won't eliminate risk or assure returns, but regular investing can spread purchases across different market conditions, without requiring anyone to correctly guess which one is coming next.

• Some obstacles can be external. Ganesha's reputation is for removing them, but in investing, the decision can be influenced by emotion, short-term noise mistaken for a signal, abandoning or a change of strategy the moment something else has a good quarter. When markets fall, the useful question isn't whether they've fallen. It's whether the original reasoning for being invested has actually changed.

A Ganesh Chaturthi reminder for investors

As Ganpati Bappa is welcomed home this year, the story behind Prathama Puja is worth carrying into a financial plan, not just a festival:

•       Begin with purpose, rather than waiting for a perfect moment.

•       Know what you're actually circling before you commit to it.

•       Stay disciplined through the noise, without being distracted by it.

•       Be patient without mistaking patience for inattention.

•       Keep learning what you actually own.

•       Keep the original goal usually of long-term wealth creation, in focus, especially when it's being tested.

Mutual fund investing doesn't offer the shortcut Kartikeya was hoping for. It asks for what Ganesh brought to that contest instead understanding before speed.

At Samco Mutual Fund, certain schemes follow a systematic, momentum oriented approach using defined investment process, rather than simply reacting to what is happening in the market.

Curious where to start?

Explore Samco Mutual Funds SIP options and find the momentum oriented fund that fits your goal.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Samco Mutual Fund | MF/077/21/03

If you've ever compared a momentum fund's performance chart with the Nifty 500, you've probably noticed something odd. It just doesn't always move the same way.

During certain market phases, momentum strategies may participate more strongly in rising markets, while during other phases, they may experience sharper declines. At times, the fund's performance can even move inversely to the broader market falling on days when the index rises or climbing when the index falls. In other stretches, it moves in the same direction as the market but at a noticeably different pace, outpacing the index on the way up or lagging well behind it. And sometimes, it moves in a way that seems to have little to do with "the market" at all. But eventually in the long run momentum investors get asymmetrical returns.

Source: Internal Research
Disclaimer: Past performance may or may not be sustained in future and is not a guarantee of any future returns. The index returns do not indicate returns of the scheme and are only mentioned for illustration of momentum as a factor.

If you're used to a regular diversified fund that moves in line with the index, all this divergence can feel concerning. Why is this fund behaving so differently from the market you're used to?

It's simply doing what it was designed to do. So instead of asking "why is this fund behaving oddly?" the better question is: "why does momentum, as a strategy, move differently on purpose?"

Key Takeaways

• Momentum funds are built to follow price strength, not to mirror the market, so their returns naturally de-link from broad indices.
• This is exactly why momentum can look "lumpy": strong run-ups when trends hold, sharper drawdowns when trends break.
• Active and Passive momentum funds work on different rulebooks, and even two active funds can behave very differently.
• Momentum is a strategy best judged over years, not days, and its performance depends heavily on the kind of market it's operating in.

Rolling Return Analysis: NIFTY500 Momentum 50 vs NIFTY 500 (21-Year History) The longer momentum is given to work, the more consistently it has outperformed the broader market:

Source: NIFTY500 Momentum 50 Index vs NIFTY 500 Index, data as on 10^th September 2026.
Disclaimer: Past performance may or may not be sustained in future and is not a guarantee of any future returns. The index returns do not indicate returns of the scheme and are mentioned only for illustration of momentum as a factor.

Momentum isn't trying to copy the benchmark, it's trying to follow strength shown by individual stocks in their recent price movement

A diversified fund typically invests across a range of sectors and companies, providing exposure to different segments of the market. As a result, its performance may broadly reflect the direction of the overall market, while also being influenced by the securities and sectors it holds.

A momentum fund follows a different approach. Rather than seeking broad exposure across the market, it seeks to identify stocks or sectors that are showing relatively strong price trends and allocate to them based on the strategy's investment process. This is where the lumpiness can come from.

Because a momentum fund's portfolio is positioned towards securities exhibiting stronger price trends, its performance can differ meaningfully from the broader market. When trends remain strong, momentum strategies may benefit from the continuation of those trends. But when trends weaken or reverse particularly during choppy markets or sharp changes in market direction securities that previously showed strong momentum may lose that strength, potentially leading to periods of underperformance or heightened volatility.

That's the nature of the cycle: periods where established trends may work in favour of the strategy, interspersed with periods were changing or reversing trends can create volatility and losses.

"Active" momentum vs "Passive" momentum, the difference you need to know

Active and passive momentum strategies can differ in how they identify, select and allocate to stocks, and these differences can influence how they behave across market cycles.

Passive momentum's rulebook is fixed by design. "Active momentum," on the other hand, is really an umbrella term, it covers very different approaches depending on the manager. Here's where that variation shows up.

Within Active Momentum, no two managers build the same fund

Even among active momentum funds, two managers can make very different choices and end up with very different portfolios, despite both calling their fund "momentum."

Universe choice matters: A strategy focused on a narrower universe of companies may have different risk and return characteristics from one that considers a broader investable universe. Expanding the universe can provide access to a wider range of securities and trends, while also introducing different levels of volatility and liquidity considerations. Some managers may also use quality or stability filters alongside momentum, seeking to combine trend-based selection with additional portfolio considerations.

Look-back period is another important consideration: A shorter look-back period may respond more quickly to recent changes in price trends, while a longer period may place greater emphasis on more established trends. Some managers may combine multiple timeframes as part of their investment process.

Rebalancing approach matters too: A fixed schedule is predictable but can lock in a portfolio right at a peak, while a dynamic, trend-based approach is more responsive and can reduce the impact of a sudden momentum crash, at the cost of predictability. Each approach has its own trade-offs, including considerations around transaction costs, timing and portfolio turnover.

Downside protection is another area where approaches can differ, staying fully invested captures the full momentum move in both directions, tactical hedging lowers drawdowns but usually caps the upside, and a valuation or quality screen offers a smoother ride at the cost of occasionally missing the biggest moves.

What this means for how you evaluate a momentum fund

Since momentum is designed to move differently, judging it the same way you'd judge a regular diversified fund doesn't quite work. A few things are worth keeping in mind instead:

1. Look at how the fund is built, not just its name - Which stocks it can pick from, how far back it looks, and how often it changes holdings all shape how it behaves
2. Expect a bumpier ride, that's by design - Sharper ups and downs, especially when trends reverse, aren't a sign something's wrong. They're simply part of how this kind of strategy works.
3. Check if it's active or passive, and if active, how - This tells you whether the fund's movement comes purely from an index, or also reflects a fund manager's decisions on universe, look-back period, rebalancing, and downside protection.
4. Think in years, not days - Momentum tends to prove itself over a longer stretch of time, not from watching it day to day.
5. Consider what kind of market you're investing in - Momentum tends to shine in a trending market and struggle in a choppy or reversing one worth keeping in mind alongside your own time horizon.

The Momentum House View

At Samco Mutual Fund, we call ourselves The Momentum House for a reason: momentum isn't just a return pattern to chase, it's a mechanism to understand.

You don't need to be a market expert to make sense of it. Once you know why momentum moves the way it does the design behind it, the behaviour driving it, and the reasons one momentum fund can differ from another, a choppy-looking chart stops feeling confusing. It starts making sense, whether you're a first-time investor or someone who's tracked markets for years.

That's the understanding we want every investor to walk away with, not just the ones who read the fine print.

If you're evaluating a specific momentum scheme with this lens in mind: as with any equity-oriented investment, the scheme is subject to market risks, and investors should consider the scheme's investment objective, investment strategy, risk factors and their own investment objectives and risk appetite before investing. Investors are advised to refer to the scheme-related documents for complete details.

For the full research paper on momentum indices, visit the NSE Indices research paper library at niftyindices.com/reports/research-paper and select the relevant momentum index (e.g., NIFTY500 Momentum 50 or NIFTY200 Momentum 30).

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Samco Mutual Fund | MF/077/21/03

A Teachers’ Day reflection on discipline, consistency, and how India’s women investors turned an untaught subject into a lasting habit.

Every school has a version of the same joke: years spent learning the capitals of countries we’d never visit, the periodic table, sentences diagrammed and never diagrammed again yet somehow no class on the things we actually needed. Taxes. Insurance. What a SIP even stands for. Somewhere between chemistry and civics, “money” quietly fell off the timetable, alongside a few other subjects everyone agreed were important, and nobody got around to teaching.

There was no textbook for it. No teacher walking in to explain compounding the way they explained photosynthesis.

But that’s only true if a teacher must stand at a blackboard.

The Faculty No One Officially Hired

Look closer, and someone probably did teach you this, just not in a classroom. A mother stretching a monthly budget so quietly you never noticed the skill behind it. A grandmother tucking away a little every month, discipline disguised as habit. A stranger on a train, mentioning in passing that money left alone tends to grow. A colleague explaining compounding over chai, with nothing more scientific than “just leave it and let it work.”

None of them had a lesson plan. They taught the way most important things get taught quietly, without either person realising a lesson was underway.

What the Lesson Actually Was

Some lessons outlast the classroom: the patience to wait, the discipline to keep going, the understanding that meaningful growth takes time.

That’s also a description of a Systematic Investment Plan (SIP) a fixed amount invested at regular intervals rather than all at once. No single dramatic decision, no cram session. Just a small, steady amount, shown up for every month, with the potential to compound into something larger than it looks in the moment. It asks for exactly what those unofficial teachers modelled: patience, consistency, and the willingness to let time do the work.

Where the Lesson Landed: India’s Women Investors

Nowhere is that pattern more visible today than among India’s women investors and the numbers behind it are worth sitting with.

●      The class skews young. In 2022, investors under 35 made up roughly 30% of India's women investor base. By 2026, that number had climbed to 38.6% a generation with no formal money education that got fluent anyway.

●      The habit is SIPs, not lump sums. SIPs now account for 28% of women’s gross inflows, up from 25% the previous year, with 58% of women investors actively investing through SIPs rather than lump-sum investing.

●      The commitment is deepening, not just spreading. Average SIP ticket sizes have grown roughly 9% year-on-year - a small, telling sign of confidence building the way discipline usually does: gradually, then noticeably.

●      The portfolios reflect it. Allocation has moved beyond a single “safe” category into hybrid, retirement-linked, and goal-based schemes, with hybrid allocations growing faster than pure equity, a portfolio built like a student who studies every subject rather than betting everything on one.

[Source: Figures on women investors' age profile, SIP adoption, ticket sizes, and asset allocation growth are drawn from CAMS' "Going Beyond the Box: Report on Women Investors 2026," based on investor data as of 31 March 2026.]

None of this made headlines. Discipline rarely does. But it’s a classroom that has been quietly topping the charts for a while not by chasing a rank, but by simply not skipping the homework.

Why This Matters Now: SIP Discipline Meets Market Momentum

That shift toward hybrid and goal-based portfolios isn’t just diversification for its own sake, it’s what discipline looks like once it’s had time to compound. And it points to a distinction worth being precise about, because the two get blurred easily.

A SIP is what gets you moving: the discipline of regular, unglamorous participation, regardless of what the market is doing that month. Momentum, as an investing principle, is what happens once things are moving the tendency for strength to build on strength, for participation to compound into pace. One is a habit; the other is what a habit, sustained long enough, eventually produces. You don’t need to time momentum. You need to already be in motion when it arrives which is precisely what a SIP quietly ensures, and precisely what India’s women investors, portfolio by portfolio, have already been doing.

To Every Teacher Who Taught Us Lessons for Life

Not all of them stood in front of a class. Some sat across the dinner table. Some never knew they were teaching at all. But the lesson stuck - patience, discipline, and the confidence that growth takes time and gathers pace the longer you stay with it.

If there’s one way to say thank you today, it’s this: start the habit they were really trying to teach you. Start a SIP, Show up for it every month. Let it build momentum quietly, the way all the best lessons do.

Frequently Asked Questions

What is a SIP?

A Systematic Investment Plan (SIP) is a method of investing a fixed sum in a mutual fund at regular intervals typically monthly instead of investing a lump sum at once. It builds wealth through disciplined, consistent participation over time

How is SIP investing different from momentum investing?

SIP investing is about when and how consistently you invest regular contributions regardless of market conditions. Momentum investing is a strategy built on the tendency of assets showing recent strength to continue performing well. SIPs build the habit of participation; momentum is a market behaviour that consistent participation is well-positioned to capture.

Are more women in India investing through SIPs?

Yes. A growing share of women investors’ mutual fund inflows now come through SIPs rather than lump sums, with SIP adoption and average ticket sizes both rising year-on-year, alongside greater diversification across fund categories.

Mutual Fund investments are subject to market risks read all scheme related documents carefully.
Samco Mutual Fund | MF/077/21/03

A simple guide to encouraging your sibling to take a step towards investing this Raksha Bandhan

Every Raksha Bandhan, sisters tie a rakhi around their brothers’ wrists a tiny thread carrying a rather big promise: I’ll always have your back.

Then comes the other, equally time-honoured tradition: the brother reaches for his wallet.

Over the years, the gifts have evolved. Sweets became chocolates, chocolates became gadgets, and cash envelopes became UPI transfers. But perhaps there’s another way to make the Rakhi gesture count not just today, but years from now.

This Raksha Bandhan, instead of just thinking only about what to give, why not think about what you can encourage your sibling to do for their future?

A SIP (Systematic Investment Plan) can be one such step. It is a simple, disciplined way of investing a fixed amount at regular intervals, helping build an investing habit over time. And unlike that smartwatch, it doesn’t need charging.

Can Raksha Bandhan Be a Nudge to Start Investing?

Mutual funds may not have a convenient “Gift this Investment” button just yet perhaps one for the wish list? but you can certainly encourage your sibling to begin their investment journey.

For an adult sibling, you can guide them towards starting a SIP in their own name, based on their financial goals, investment horizon and risk appetite. For a minor sibling, investments are subject to applicable rules and requirements, and the process may differ from that for an adult investor.

Since mutual fund investments are regulated by SEBI, the applicable KYC and other prescribed requirements need to be completed before an investment can be made. If your sibling is unsure about which fund or investment approach may be suitable, they can consider consulting a qualified mutual fund advisor.

So, the Rakhi gesture doesn't have to be about handing over an investment. Sometimes, it can simply be about giving someone the right nudge to start one.

Why a SIP Is a Meaningful Rakhi Gesture

A lump-sum gift says, “Here’s something for you” encouraging someone to start a SIP says, “I’m thinking about your future, too.”

That’s what makes the idea a natural fit for Raksha Bandhan.

A SIP is a recurring investment where a fixed amount is invested at regular intervals. Much like a Rakhi is a yearly reminder of a bond that lasts far beyond one day, a SIP is a small commitment that continues month after month.

And then there’s compounding.

A relatively small monthly investment, given enough time, has the potential to grow into a meaningful corpus as returns generated over time can themselves generate further potential returns. This is why starting early can matter the advantage isn't necessarily about making a big investment on day one; it’s about giving the investment more time to grow.

Of course, mutual fund investments are subject to market risks, and returns are neither guaranteed nor fixed. The value of the investment can move with market conditions and the scheme chosen.

SIPs can also be started with relatively small amounts, although minimum investment amounts vary across schemes and fund houses. So, whether the starting amount is a few hundred or a few thousand rupees a month, the bigger idea is the habit of investing consistently.

Step-by-Step: How to Start a SIP for Your Sibling

1. Complete KYC verification: Your sibling will need a PAN card, an Aadhaar-linked bank account, and to complete their KYC either online (via video KYC) or through a physical form, if they haven't already (check the AMC website)

2. Choose a fund category: Decide on an equity, debt, or hybrid fund based on your sibling's age, risk appetite, and investment horizon.

3. Decide the SIP amount and date: Pick a monthly amount that's comfortable to sustain and a debit date that aligns with their cash flow.

4. Set up auto-debit (mandate): Register an NACH or e-mandate so the SIP amount is deducted automatically from the bank account each month.

5. Confirm the first installment: Most platforms process the first SIP installment shortly after mandate registration, with subsequent installments following the chosen cycle.

Encourage your sibling to review the investment's progress every few months rather than daily, since SIPs are built for the long term.  You can also consult a financial advisor before investing.

What Kind of Fund Should You Choose?

This is where the Rakhi gesture needs a little more thought than simply picking a scheme because someone mentioned it in the family WhatsApp group.

There is no one-size-fits-all fund or one “best” fund for every sibling.

The right choice depends on factors such as the investment objective, time horizon, risk appetite, existing investments and financial commitments.

For eg. A sibling investing for a goal five years away may have very different needs from one investing for a goal 15 years away. Similarly, someone comfortable with market fluctuations may have a different risk profile from someone who prefers greater stability. You may consult a financial advisor before investing.

The point is simple: choose based on the person and the goal, not just the occasion.

This article is meant to be educational rather than prescriptive, the specific fund category and scheme should ideally be chosen after your sibling reviews the scheme information document and, where appropriate, consults a qualified financial advisor or mutual fund distributor.

Other Meaningful Financial Gestures Beyond SIPs

A SIP isn’t the only way to make your Rakhi gesture financially meaningful.

• Lump Sum: Investing a larger amount at one go, rather than spreading it across regular installments.
• STP (Systematic Transfer Plan): Gradually transferring a predetermined amount from one mutual fund scheme to another at regular intervals.
• SWP (Systematic Withdrawal Plan): Withdrawing a predetermined amount from a mutual fund investment at regular intervals, which can be useful when the focus shifts from building wealth to generating cash flows.
• SIF (Specialised Investment Fund) offered by some fund houses: A newer mutual fund category designed for investors seeking differentiated strategies, subject to the applicable eligibility and investment requirement.

Each of these carries a different risk-return profile, so the right choice depends on what you're trying to achieve capital growth, stability, or simply building a saving habit. They can also consult a financial advisor before investing.

Sometimes, it’s about helping someone take the first step.  

Frequently Asked Questions

Can I gift a mutual fund folio to someone else in India?
You cannot transfer an existing mutual fund folio to another person as a "gift" in the way you might gift a physical item. Instead, you can help or guide your sibling or recommend him to a financial advisor, before investing in a new folio in their name (once their KYC is complete) or by transferring money for them to invest themselves.

Is there a minimum amount to recommend a SIP?
Minimum SIP amounts are set by individual fund houses and schemes, and are generally quite low, making it easy to start a SIP even with a modest monthly commitment.

Are mutual fund gifts taxable in India?
Money gifted between close relatives, including siblings, is generally exempt from gift tax under Indian tax law. However, any capital gains earned when the mutual fund units are eventually redeemed are taxable in the hands of the unit holder (your sibling), as per applicable capital gains tax rules. It's advisable to consult a tax professional for specifics relevant to your situation.

Can NRIs invest in mutual funds to siblings in India?
NRIs can invest in Indian mutual funds subject to FEMA regulations and fund-house-specific NRI KYC requirements. Rules can vary by country of residence, so NRIs should check fund house-specific NRI investment guidelines before proceeding.

What documents are needed to start a SIP in someone else's name?
The investor (your sibling, in this case) will typically need a PAN card, address proof, a bank account for the mandate, and to complete KYC formalities, since the folio and SIP must be registered in their own name, please check the amc website to know in detail.

A Promise That helps to Grow with Time

A Rakhi may be a thread, but the promise behind it lasts much longer.

This Raksha Bandhan, that promise doesn’t have to stop at “I’ll always have your back.” It can also be a little nudge towards thinking about the future and building a habit of investing.

No fancy wrapping paper. No batteries. No last-minute shopping spree. Just a small step that could keep growing with time.

So, this Raksha Bandhan, encourage your sibling to take that step—or perhaps take it yourself.

Some gifts are enjoyed today. Some gestures can grow into something meaningful tomorrow.

Mutual Fund investments are subject to market risks read all scheme related documents carefully.
Samco Mutual Fund | MF/077/21/03

Onam is Kerala's festival of homecoming, harvest, prosperity, and togetherness. It is a time when families come together, homes are prepared, pookalams bloom, and the traditional Onasadya brings everyone around the same table.

But at the heart of Onam is a simple idea: abundance takes time to create isn’t it?

A good harvest is not the result of one day's effort. It comes from preparation, patience, consistency, and care over an entire season. In many ways, we can thus infer that building wealth follows the same principles.

Good investing is not about chasing every market opportunity or finding the perfect time to invest. It is about having a plan, staying disciplined, diversifying thoughtfully, and giving your investments enough time to grow.

Here are five Onam traditions that offer valuable lessons for mutual fund investors.

1. Onasadya: The Power of Diversification

An Onasadya is never about one dish. Served on a banana leaf, it brings together a variety of flavours, textures, and ingredients. Each has its own role, but it is the combination that creates a complete and balanced meal.

A well-diversified investment portfolio works in much the same way.

Depending on your goals, risk appetite, and investment horizon, a portfolio may include different asset classes such as equity, debt, gold, or multi-asset strategies. The idea is not to invest in everything, but to aim to have the right mix so that your portfolio does not depend entirely on the performance of one investment or asset class.

Diversification cannot eliminate market risk, but it can help create a more balanced portfolio.

Investor takeaway: Like a good Onasadya, a good portfolio is about the right balance, not putting everything on one plate.

2. Pookalam: The Value of Consistency

A Pookalam takes time to be formed, with flower petals carefully arranged layer by layer to create a beautiful, intricate design. While the final arrangement may come together in a few hours, it is the collective effort, care, and attention to detail that brings the design to life.

This can be related to simple investing through a Systematic Investment Plan (SIP).

An SIP allows you to invest a fixed amount at regular intervals. Each contribution may seem small on its own, but over time, consistent investing can help build a meaningful corpus, depending on investment performance.

The same approach may be applied to different financial goals. You could invest systematically towards retirement, a child's education, buying a home, or another long-term objective.

The important thing is to aim to give every investment a purpose and every goal a plan.

Investor takeaway: Big financial goals can be built through small, consistent investments made with a clear purpose.

3. Vallamkali: The Importance of Staying in Rhythm

Vallamkali, Kerala's iconic boat race, is a striking example of discipline and coordination. Dozens of rowers move together, following the same rhythm and pulling towards a common destination.

Investing also requires this kind of alignment.

Your goals, risk appetite, time horizon, and investment strategy need to work together. And once a plan is in place, staying disciplined becomes particularly important when markets become volatile.

When markets fall, investors may feel tempted to stop investing. When markets rise sharply, there can be a temptation to chase recent performance.

But reacting to every market movement can take you away from your long-term plan.

Investor takeaway: Investing is less about reacting to every wave and more about staying in rhythm with your financial goals.

4. Onam Homecoming: A Reminder to Review Your Portfolio

Onam is a time for coming home, reconnecting, and taking a pause from everyday routines.

Investors can take inspiration from this idea of a pause.

Your financial goals and circumstances can change over time. Markets also move, which means your portfolio's asset allocation may gradually move away from what you originally intended.

A periodic portfolio review can help you ask:
• Are my investments still aligned with my goals?
• Does my portfolio match my current risk appetite?
• Has my investment horizon changed?
• Does my portfolio need rebalancing?

A review does not mean constantly changing your investments. Sometimes, the best outcome of a review is simply confirming that your original plan is still on track.

Investor takeaway: Use milestones as an opportunity to pause, review your portfolio, and realign it with the goals that matter.

5. Puthari: The Power of Compounding

Onam celebrates the harvest, the visible reward for months of work that happened quietly in the background.

Seeds were sown, crops were nurtured, and there was a period of waiting before the harvest arrived.

This is a useful way to understand compounding.

In the early years of investing, the growth of your investment may not seem significant. But when returns are reinvested, they can potentially generate further returns over time. The longer the investment remains invested, the more time compounding has to work.

Like a field that gradually moves from sowing to harvest, wealth creation can also happen quietly before the results become visible.

Investor takeaway: Compounding rewards patience. Give your investments time, and let time work in your favour.    

The Onam Lesson for Investors
Onam reminds us that abundance is built over a season, not in a day.

The Onasadya teaches us balance. The Pookalam shows us the value of consistency. Vallamkali demonstrates discipline and coordination. Homecoming reminds us to pause and review. And the harvest illustrates what patience and time can create.

These are also important principles of disciplined mutual fund investing.

Diversify, Invest consistently, Stay focused on your goals, Review when needed and give your investments time to grow.

Because just like a harvest, the wealth we see tomorrow is often the result of the small, disciplined decisions we make today.

This Onam, as we celebrate abundance and new beginnings, may we also remember to nurture our financial goals with the same patience, discipline, and care.

Happy Onam!

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Samco Mutual Fund | MF/077/21/03

Our recent 𝗡𝗙𝗢 was covered by 𝗖𝗡𝗕𝗖 𝗧𝗩𝟭𝟴.

The article talks about the fund’s unique approach to investing in the mid-cap segment the momentum way.

https://s-mf.in/9Q

We all invest in mutual funds by looking at the risk associated with it, and how much returns it gives. Do you know about the person who manages the large amount of investors? Yes, we are talking about fund managers. In this article, we will discuss about the fund manager, their role in the AMC, their duties, and how to evaluate them.

Fund Manager

A fund manager is an investment professional. A fund manager is in charge of carrying out a fund's investment strategy and monitoring its trading activities. They manage researchers, engage in research, and make important investment decisions for mutual funds.

A fund manager is responsible for managing the portfolio of schemes offered by the mutual fund. A fund manager manages the portfolio in an active or passive way.

Role of a fund manager

A fund manager is an investment professional who is appointed by an Asset Management Company(AMC) to manage one or more schemes offered by the fund house. The fund manager provides the best results to match the fund's goal. Later, they trade in securities that are appropriate and sell those that are not. Fund managers must dive deep into large financial data of traded companies. They conduct various research using a variety of tools and software platforms. The fund manager gathers the data, reads financial briefings, and stays up to date on current economic events.

The fund manager's role also involves meeting the industry experts and company personnel. They learn about the inner workings of the company whose stock they plan to invest in. They shortlist various companies that meet the investment objectives of the fund. After that, they trade on these stocks. In a multi-asset fund, there is a similar process for bonds, commodities, and other assets as well. A fund manager in a larger fund house may have a team of analysts. The analysts' research companies and a team of traders and dealers to execute buy and sell trades.

The fund managers prepare regular investor reports about the fund's portfolio composition. They also explain some of the major portfolio decisions that go with, and performance. A fund manager attends various events to explain their fund's strategy and represent their company in panel discussions. They aim to strengthen the brand appeal of the fund house and their managed funds in particular.

The key role of a fund manager is to manage the costs associated with administering and operating a fund. All portfolio composition decisions with an eye toward efficient cost management.

Fund managers are also responsible for liquidity and risk management. They must ensure that the fund has adequate liquidity. The assets in the fund's portfolio must be liquid enough to sell and without the loss in value, incase of redemption received from the investor.

Duties of a Fund Manager

1. Meeting the reporting requirements

The role of a fund manager is to design a fund portfolio keeping in mind the reporting standards. The fund must fulfil the objectives of the scheme, the strategies, risks, expenses, and various policies. The fund managers ensure that the investors are aware and abide by these details and rules. They also make sure that all the documents are furnished on time and follow the laws and regulations.

2. Complying with Regulatory Authorities

The operations of the funds must be in line with the rules set out by the Securities and Exchange Board of India.  Fund managers are answerable to legislators and investors in case of non-compliance. They play a critical role along with the compliance team.

3. The Protection of Wealth

The fund managers have to protect the wealth of investors. The funds are subject to some risks and generate returns. But they must not be subjected to reckless risk assumptions. The decision of the fund manager to buy or sell assets will be on research and due diligence.

The fund manager also investigates the company. Uses risk management techniques to protect the wealth of the investors. The fund managers ensure the diversification in asset portfolios to address the risk

How to evaluate a Fund Manager?

After understanding about the fund manager’s role in the mutual fund industry, it is critical to learn how to test them. The fund manager develops an investment strategy that supports the fund's investment goal. A sound investment goal can fail due to poor strategic planning and execution.

There are several factors that investors can consider when evaluating a fund manager. These factors can provide valuable insight about the right fund manager or are simply fulfilling his or her mandate.

1. Track Record: The fund manager states that past performance is not a predictor of future performance. The important factor is selecting a performing fund and a fund manager. Proving consistent performance depicts the experience and expertise of the fund manager. They navigate a fund portfolio through difficult times and also generate superior returns.
2. Investing Style: Different fund managers will approach the same fund portfolio in different ways. This difference is due to their different investment styles.

• One fund manager may choose to invest for the long term, whereas another may choose to take several short-term positions in stocks and bonds.
• One manager may align the portfolio with the underlying benchmark. Another may completely go off with the benchmark composition and create a portfolio based on their market views.
• One manager may remain invested in the market all the time. Another may decide to liquidate a part of the portfolio and invest it in cash until he finds a suitable investment opportunity. Investors can examine the changes in the portfolio over the course of a fund manager's management of the fund. They may also seek the advice of an advisor to better understand the investment styles of a fund manager.
• Is the manager a shareholder in his own managed fund? This may appear to be a minor point, but it is crucial. A fund manager charges a fee to manage other people's money, but do they invest their own money in the fund they manage? If they do, it demonstrates their belief in their own stock picks. If their stock-picking abilities are excellent to outperform the market and multiply investors' money. Why wouldn't they want to enjoy that as well?

3. Outperforming the Benchmark Index: Each fund has a benchmark index against which it aims to outperform. If a fund manager outperforms the benchmark index, it may be worthwhile to invest with them. But it is critical to consider a manager's performance during market downturns. Because when markets are rising, many managers may outperform their benchmarks. They make it difficult to identify whether the market performance is due to luck or skill. Investors should prefer a skilled manager to one who is lucky.

How do Fund Managers decide where to invest?

As mentioned earlier in the article, one must work for several years as an analyst to take the responsibility of fund management. This experience is key for a budding manager to shape his market insight. And choosing the right investment given the market condition.

A fund manager deep dives into company fundamentals by creating or managing a stock portfolio. They look at quantitative metrics to create a sector and industry-wide list of companies that can fit the investment mandate of the fund.

They combine the company-specific information with the broad market trend in terms: such as

• Market movement direction
• Sector and industry-specific trends,
• The direction of the economy and fiscal and monetary policies,
• Foreign investor interest and money movement, and other factors.

A fund manager prepares a final selection of stocks in the portfolio based on his study. His past expertise analyses equities after considering the above factors.

A fund manager takes the help of an analyst team, reports their findings to an investment committee. The committee chooses the best investment avenues for a fund based on internal brainstorming.

FAQs

Q. Does a fund manager change frequently?
A. No! The fund manager is the backbone of the strategy and philosophy of a scheme. A change in the fund manager may bring about a change in the investment methods and stock selection.

Q. Is A Fund Manager Answerable to Investors?

A. Yes. You can always reach out with your questions to the Investor Relations cell of the fund house. If you have query-specific questions reach out to the fund managers.

Visit our Knowledge Center for more articles on Mutual Funds. You can also find many valuable blogs in our Help and Support section regarding Samco Mutual Fund.

Nifty50 has had an eventful ride filled with structural changes and macro-economic cycles, right since 1995. In this period, the index has given a CAGR return of ~11% in ~27 years or an absolute return of 1700% as it has made its journey from 1000 to 17000+.

The NIFTY is in its 27^th year running and there are several vital lessons from its journey. In SAMCO Mutual Fund’s first edition of the “SAMCO MF Food for thought” series, we try to spell out some of the lessons we’ve learnt from the NIFTY’s journey. The source of our learnings is a detailed look at the NIFTY’s entries and exits since inception.

1. Strike Rate is Overrated – The NIFTY has a strike rate of only 55%

Most investors try to over optimize for win rates i.e. they anchor their investments to try and achieve a near 100% win rate on the trades/investments they make. Investors and even fund managers often want all their bets to end with a positive return. After all, who likes to be wrong?

Let us tell you a startling fact – The NIFTY has been right only 55% of the times and despite that delivered a handsome 11.31% CAGR

There have been an aggregate of 152 positions that the NIFTY has taken since inception of which only 85 have generated a win and the rest 67 have been losing positions. A complete list of all positions of the NIFTY is annexed.

Myth Busted – Generating a high return is possible even by being right just about half the times!

An obsession with win rate in investing and money management is ego driven and clearly the NIFTY has no Ego ;)

As long as investors are able to manage the overall risk-reward equation (some of which we’ve highlighted in our other learnings below), anything above a 50-60% win rate can deliver exceptional returns.

2. Let your winner’s run – NIFTY’s winners are 33 times bigger than its losers

Too often investors talk about “taking a profit” and waiting to “at least recover cost”. The fact is that if you have a profit on an investment it might be an indication that you own a share in a business which is worth holding on to. Conversely, we are all prone to run our losers, hoping they will get back to what we paid for them. This is commonly also known as the “Disposition Effect”.

Gardeners nurture flowers and pull up weeds, not the other way around.

Startling Fact # 2 – NIFTY’s average winning position is +1500% and average losing position is -45%

Because of the Nifty’s algorithmic, methodical and un-emotional investing process, the NIFTY is free from cognitive biases and let’s its winners run to infinity and beyond, literally! It doesn’t book profits on its winners.

Myth Busted – You need to book profits from time to time!

The math works for Nifty, if you make money on 55% of the trades with winners being at 1500%+ and losers only at -45%, you end up with a mathematical edge and can deliver exceptional returns.

However counterintuitive it may sound, it is true that no one ever went broke taking profits but serious wealth is made only by letting your winners run for years.

3. Not only ride, let your winner’s age – NIFTY holds its winners for 3x the time it holds its losers

“If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes.” – Warren Buffett

The NIFTY has taken Mr. Buffett’s suggestion on holding period quite seriously. When the NIFTY initiates a position, it holds the patience of holding onto its stock for several years.

Startling Fact # 3 – NIFTY’s average winning position is held for an average of 12.5 years and the average losing position is held for about ~ 4 years

9 Stocks have been a part of the current NIFTY 50 since inception. The top contributors have been in the index for 23+ years. Losers in the NIFTY have been cut relatively faster with losers’ life in the NIFTY at ~4 years on an average since their entry i.e. 1/3^rd of the time that winners are held.

This is important since most investors often give their losers a lot more time to recover in hope and give very little time to winning positions. Winning stocks in a portfolio often age like fine wine.

The Stock(s)/ Issuer(s) referred in the article, should not be construed as an investment advice or a recommendation by Samco Mutual Fund.  Investors should consult their financial advisors before making any investment decision.

4. Don't need to be Hyper-active to make money – The NIFTY makes only about 4 trades a year

Buffett says, ‘The stock market is designed to transfer money from the active to the patient.’

In the urge to be busy and active, investors including fund managers engage in a lot of dealing activity. Brokers want investors to trade. Several investment advisers and mutual fund investors want their fund managers to be “active”. There are often people who ask, “Why pay a fund manager any fees. if he’s not constant churning the portfolio?.”

Startling Fact # 4 – NIFTY makes only about 4 trades a year!

As can be seen from NIFTY’s trades, In its long and continuing lifespan it has undergone only ~150 trades with an average of 4 stock rejigs in a year. Despite such a low churn, it has managed to deliver a 11%+ CAGR return.

Myth busted – You need to constantly churn your portfolio!

Results can be delivered even without frequent churning. In fact, as Mr. Buffett suggested, if you are patient, the market will transfer wealth back to you from the hyper active folks.

Also, another drawback of being hyper active with constant entries and exits in investing is the drag trading costs can cause to one’s portfolio.

5. For a stock to be a 100-bagger it needs to be a 10-bagger first – The NIFTY only picks proven winners

Most investors are constantly in the search of the next multi-bagger. The entire investment community believes investing is a prediction game where you can only win if you are able to predict the next set of winners.

Startling Fact # 5 – NIFTY only buys proven winners. It doesn’t predict winners but instead waits for actual winners to emerge and in many cases ends up buying after a stock would be up many-fold.

A stock has always entered Nifty50 after it has already been proven a winner. This is because only if its price increases, will its free-float market capitalization increase enough for it to be added in the index. So, a stock first needs to be a 10-bagger, then a 25-bagger, then eventually it could be a 100-bagger!

Myth Busted – You need to be early to identify a stock and only then can you make a decent return!

Unlike most participants, the NIFTY doesn’t predict winners. The NIFTY waits for winners to be proven by market forces and then buys the winners. Time and again, the NIFTY has bought stocks after serious run-ups and yet has managed to deliver a great 11%+ CAGR over its lifetime. In the process of betting winners, the NIFTY has saved itself from the prediction game!

To demonstrate what we are saying as an example, Asian Paints was only included in the index in April 2012, when it had already gone up by 10 times since 2002. However, since then, the stock price has gone up by almost 10 times again.

Out of the 135+ unique stocks which have entered the index since inception, 10 stocks managed to post a 25X return, out of which 6 have advanced to become 50-baggers and 3 have emerged as “100-baggers”.

Investors would be served much better if they ended up buying companies that were already multi baggers instead of predicting which companies could be future multi baggers.

6. All you need is just 3-5 ideas in a lifetime – More than half of NIFTY’s returns have come from just 3 stocks!

Billionaire investor Warren Buffett puts it quite succinctly: “You only have to be right on a very, very few things in your lifetime as long as you never make any big mistakes. An investor needs to do very few things right as long as he or she avoids big mistakes.”

Holding a large number of stocks in your portfolio doesn’t guarantee the highest returns.

Startling Fact # 6 – If you observe Nifty50’s history, out of the 135+ unique stocks that entered, exited or have stayed in the index ONLY 3 stocks have contributed to more than half of Nifty50’s absolute returns in 27 years. HDFC Bank, Infosys and Reliance Industries have collectively delivered a sum of ~66,800% absolute returns which is more than half the returns contributed by all other constituents in the index on an absolute basis.

Myth Busted – As investors we constantly need to search for new ideas and trends to profit!

One just needs to find the right 3-5 stocks in their lifetime rather than chasing hundreds of stocks that may be subject to current fads and fancies of the market for time to time. As you can see in the below chart, only few businesses have given outsized positive returns in absolute terms while the majority have given less than 500% returns.

7. You can cut losers even faster – The NIFTY waits too long sometimes to cut its losers

While there are many things that we love about the NIFTY, there are some things that an active investor could do much better than NIFTY’s mechanical approach.

Startling Fact #7 – Despite a clearly large losing position, the NIFTY waits for a stock to fall below to its lowest rank to exit.

Nifty50 follows a strategy wherein it holds the top 50 liquid stocks by free float. Now unless a stock’s free float market cap falls below the 50th stock or the 51st stock’s free float market cap rises above the 50th stock, there will not be any rejig in the index. That means even if the fundamentals of the stock deteriorates or if a company is on the verge of extinction/bankruptcy, until and unless the above conditions are fulfilled the stock is not removed from the index. More often than not, it is too late and exits usually happen after the stock has deteriorated significantly which would just add to Nifty50’s losses. Hence, it is better to cut your losses even faster and not let the pain prolong.

For example, Yes Bank fell 29% in a single day on 21st September 2018 when the hints of fraud at the bank came to light when RBI pointed out irregularities in the bank. The close price on that day was Rs. 226.5 while the exit from the index happened on 19th March 2020 when it’s close price was Rs. 53.85 i.e. it was 76% further down since 21st September 2018. As traders often say, the first loss is the best loss. As investors, we need not be subject to mechanical ranking based exits on free float and hence can actually exit the party as soon as we see the first set of people puking!

8. It’s better to buy high and sell higher than merely buying low and selling high – NIFTY makes most of its entries at All Time Highs without worrying about being late

As we have established earlier that Nifty50 only includes a business in its portfolio after it has become a proven winner. Nifty50 has a history of buying many stocks at their all-time highs. But despite that, the stocks have continued to perform well and have generated returns for investors. Hence, as counterintuitive as it may seem, it is never too late to enter a stock.

The goal is to make more on your winners than you lose on your losers and do it repeatedly. It's not about buying low and selling high, it's about buying lower than you sell. It's about making money!

9. Pick a style/method of investing and stick to it – NIFTY’s style is “Bhav Bhagwan Che”

No one can practically know EVERYTHING about a business or a company before investing in it. In fact, with proper rules and processes in place, you can still make money by investing even when you do not know anything about a company’s fundamentals, its industry or its promoter?

Wondering how is that even possible? Nify50 has done it! The criteria for a stock to enter or exit the Nifty50 “Portfolio” is the growth of its free float market capitalisation and fulfilling other criteria like impact cost, frequency of trading, etc.

It does not evaluate the financials of the business, does not meet its management, does not know what the business or industry the company operates. It doesn't track the day to day activities of the businesses but it still manages to makes money.

It is the discipline in its strategy which has enabled it to deliver a CAGR of 11% since 27 years. Because as per its discipline whichever stock experiences an increase in its free float market capitalisation to be among the top 50 band will make an entry into the index and vice versa with its exit.

Even Warren Buffett has widely quoted that ‘An idiot with a plan can beat a genius without a plan.’ Given that Nifty50 follows a process driven strategy and sticks to its process without any human interventions, it has been able to generate such returns in the long period.

List of NIFTY Entries and Exits

Important Notes:

1. Constituents' weightages have not been considered in calculating returns.
2. Dividends have not been considered in calculating returns.
3. Prices have been adjusted for corporate actions.

Disclosures

The Stock(s)/ Issuer(s) referred in the document, should not be construed as an investment advice or a recommendation by Samco Mutual Fund.

As of December 31, 2022, Samco Mutual Fund is having exposure in the following stocks in its scheme:

Samco Flexi Cap Fund

Samco ELSS Tax Saver Fund

Disclaimer

In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house. However, the AMC does not warrant the accuracy, reasonableness and/ or completeness of any information.

The information provided is not intended to be used by investors as the sole basis for investment decisions, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific investor.

Investors are advised to consult their own legal tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of Samco Mutual Fund. The information contained herein should not be construed as a forecast or promise nor should it be considered as an investment advice.

The AMC (including its affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not be liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner.