Introduction
Indian markets are ushering a dynamic trend shift as we advance into mid-2025. With Nifty and Sensex racing toward newer highs and retail participation increasing amidst post-election volatility, the eternal question for investors is: Momentum or Value Investing—what is actually working in the year 2025?
In this blog, we will clarify both approaches, sift through the ongoing market performance, and aid you with deciding which of them goes with your style of investing in this very environment.
What is Momentum Investing?
Momentum investing views upward movements of a stock as an opportunity to buy ahead of an anticipated rise in prices and along the same lines acts to sell downtrends. At the core of it stands the belief: “Stocks that have performed well recently will continue to do well in the near term.”
Key traits of momentum stocks include:
- A recent surge in prices
- Heavy trading volumes
- Fresh flows of news or beating earnings
- Strong technical strengths (RSI, MACD) weak)
Example: Tata Elxsi, BSE Ltd., and RVNL were great momentum plays in 2025, supported by industry tailwinds and earnings surprises.
What Is Value Investing?
Value investing, as popularized by none other than Warren Buffett, entails identifying undervalued stocks—companies trading below their intrinsic values. The objective is to buy stocks cheap and hold them until the market fetches the price reflecting the real worth of the stock.
Key Traits of Value Stocks:
- Low Price-to-Earnings (P/E) or Price-to-Book (P/B) ratio
- Good cash flows and fundamentals
- Temporarily depressed sectors
- High dividend yield
Example: In 2025, PSU banks, some FMCG, and auto ancillaries like Hero MotoCorp and NTPC seem undervalued for the long term.
Momentum vs Value: What’s Working in 2025?
Performance Snapshot (Jan to May 2025):
| Strategy | Average Return | Volatility | Popular Sectors |
| Momentum | 18% | High | Capital Goods, Smallcaps, Railways |
| Value Investing | 11% | Low | PSU Banks, Energy, FMCG |
Analysis:
- Momentum strategy is currently offering better short-term gains given post-election market rallies and upbeat investor sentiment and aggressive fund flows toward trending sectors.
- Value investing is supposed to give more consistent returns; however, it is underperforming but gaining traction as market valuations appear stretched and correction fears build.
Which Strategy Should You Pick in 2025?
Momentum Investing if:
- Active trading is your game and you carry some risk.
- You study charts and follow trendlines
- Short-term or medium-term gains are your target.
Choose Value Investing if:
- Your horizon is long-term investing based on fundamentals with steadier returns over a long time.
- You are looking for opportunities less visible during market corrections.
- Hybrid Approach: Best of Both Worlds
In 2025, many genius investors would blend these two. For instance:
- 40% of value stocks in portfolio (downside protection).
- 60% in momentum stocks that are trending (growth).
This hybrid model helps to balance that risk and reward component, becoming all the more important in today’s dynamic and news-driven market.
Conclusion
With the momentum investing prevailing in 2025, behind the areas with government push and retail frenzy, value investing remains safe and offers long-compounding opportunities.
The option that you decide on depends entirely on what financial goals you have, how long you have to attain these goals, and how much risk you are willing to take. The market’s timings to switch are well known to the successful investors.