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Strategy Comparison

NIFTY vs Momentum

Post-tax, post-withdrawal comparison for Indian investors

Understanding real-world returns means accounting for taxes and withdrawals. This page shows how a momentum strategy compares to passive NIFTY investing when you include STCG/LTCG taxes and optional yearly withdrawals.

NIFTY TRI (Passive)

Characteristics

  • Buy and hold approach
  • Lower turnover, less STCG
  • Market cap weighted
  • Simple to implement

Best for: Long-term investors who prefer simplicity and lower tax drag

Momentum Strategy

Characteristics

  • Active stock selection
  • Higher turnover, more STCG
  • Momentum-based weighting
  • Potential for outperformance

Best for: Investors willing to accept higher taxes for potential alpha in trending markets

What We Compare

Tax Treatment

Apply user-configured STCG/LTCG rates. Momentum typically incurs more short-term capital gains due to higher turnover.

Withdrawals

Optional yearly withdrawals applied equally to both strategies, helping you understand sequence risk and drawdown impact.

Market Cycles

Test across different regimes—bull markets, bear markets, and sideways periods—to see when each approach shines.

Sequence Risk

Understand how withdrawal timing affects long-term outcomes, especially during market downturns.

Run Your Own Comparison

Configure your own tax rates, withdrawal amounts, and time periods to see which approach works better for your scenario

Start Free Comparison Now

Key Questions

Taxes have a material impact on compounding over time. Strategies with higher turnover (like momentum) can underperform after-tax even if their pre-tax returns appear similar or better. Including taxes in your backtest provides a more realistic picture of actual investor returns.

Use StratLab's stress testing features to examine specific periods like 2008 (Global Financial Crisis) or 2020 (COVID crash). You can see drawdowns, recovery paths, and withdrawal impacts for both NIFTY and momentum under identical conditions.

Sequence risk refers to the danger of poor market returns early in your withdrawal phase. If you start withdrawing during a market downturn, you sell assets at depressed prices, reducing your portfolio's ability to recover. Both strategies face this risk, but the impact differs based on drawdown severity and recovery speed.

Absolutely! StratLab lets you set custom STCG/LTCG tax rates, withdrawal percentages, time periods, and more. This helps you model your specific situation rather than relying on generic assumptions.