Introduction
Momentum trading is all about riding the wave. Traders identify stocks that are already moving significantly in one direction—up or down—and aim to jump on board before the movement loses steam. But the key question remains: how do you find these stocks before the majority catches on?
If you’re a trader in India trying to capitalize on short- to medium-term price movements, scanning for momentum stocks is your most critical skill. In this guide, we’ll show you exactly how to do that using data-driven methods, scanners, tools, and proven setups.
Let’s dive in.
What is Momentum Trading?
Before learning how to scan for momentum stocks, let’s quickly define momentum trading.
Using the momentum trading method, traders purchase stocks that are rising with significant volume and sell those that are falling.The core belief is “stocks that move in a direction will continue moving in that direction—until they don’t.”
In simple terms, traders follow the trend, not fight it.
Why Scanning Matters in Momentum Trading
Momentum trading is fast-paced. By the time the news breaks or social media picks it up, it’s often too late. That’s why stock scanning is essential. Scanning helps you:
- Identify breakout setups before they explode
- Filter stocks based on volume, price action, and volatility
- Avoid noise and stick to high-probability trades
- Save time by automating your stock selection process
Key Criteria to Scan for Momentum Stocks
To identify momentum stocks effectively, you must understand what defines a momentum stock. Here are the main factors:
1. Price Breakout or Breakdown
A stock breaking out of its previous resistance or support zone is a strong momentum signal. Look for:
- Breakout from range/consolidation
- New 52-week highs/lows
- Multi-day high or low breakouts
2. High Relative Volume
Volume confirms the strength of a move. Relative volume compares current volume to the average:
- Relative Volume > 1.5 is typically strong
- Look for volume spikes on breakouts
3. Price Performance
Look for stocks up 5%–15% in the last few days. They often continue their trend if supported by volume.
4. Strong Technical Indicators
- Stocks above 20-day and 50-day moving averages
- RSI between 60–80 (but not in overbought zone yet)
- MACD crossover on the bullish side
5. News or Sectoral Tailwind
Momentum is often triggered by:
- Quarterly results
- Sectoral rotation (like PSU, defense, auto, etc.)
- Government policies or macro news
Best Tools to Scan for Momentum Stocks in India
Now that you know what to look for, let’s explore the tools to help you find those stocks.
1. Chartink
Chartink is one of the most widely used stock scanning platforms in India.
✅ Pros:
- Real-time scanning
- No coding needed
- Free and customizable
🔥 Example Scanner: Momentum Breakout Scanner (Daily)
Criteria:
- Price above 20 and 50 SMA
- Day’s volume > 1.5x average
- RSI above 60
- Breakout above previous swing high
Pro Tip: Set alerts to get notified instantly when conditions match.
2. TradingView
TradingView is not just for charting—it’s a powerful scanner too.
- Use “Stock Screener” on the platform
- Set filters like:
- Market Cap > ₹1000 Cr
- Change % (Day) > 2%
- RSI between 60 and 80
- Volume > 2x average
✅ Use custom indicators and alerts
✅ Combine fundamentals with technicals
3. Screener.in (Fundamental Focus)
Though not ideal for intraday or short-term trades, Screener.in helps you spot fundamentally strong stocks gaining momentum.
Use these filters:
- Sales growth > 10%
- Profit growth > 20%
- Price above 20 EMA
- PEG ratio < 1
You’ll get quality small/mid-cap momentum candidates.
4. Trendlyne
Trendlyne allows you to create custom screeners with built-in momentum factors.
Search for:
- Price Strength Score
- Alpha generation stocks
- Technical Breakouts
It’s especially helpful for swing traders.
Types of Scans Based on Timeframes
Momentum stocks can be scanned based on your trading timeframe:
1. Daily Scans (Swing Traders)
Use:
- Price above 20 and 50 EMA
- New 20-day high
- Volume > 2x average
- RSI between 60–75
Ideal for:
- Holding period: 3–10 days
- Capturing 10–15% moves
2. Intraday Scans
Look for:
- VWAP Breakout
- Price up > 1.5% in 15 min
- OI Spike (F&O stocks)
- Unusual volume surge
Useful during:
- 9:30–10:30 AM (Opening range breakout)
- Post 1 PM (mid-day continuation trades)
3. Weekly Scans (Positional Traders)
Use:
- Price breakout on weekly timeframe
- Price above 100 & 200 EMA
- Consistent volume over 3 weeks
- Weekly RSI > 55
Best for:
- Traders holding 2–4 weeks
- Identifying structural momentum
Custom Scanning Strategy for Indian Traders
Let’s build a scanner tailored to the Indian market.
Chartink Scanner Logic for Daily Timeframe:
markdownCopyEdit- [0] Latest Close > Previous Resistance (last 10 days)
- [1] Close > 20 SMA AND Close > 50 SMA
- [2] Volume > 2 x 10-day average
- [3] RSI(14) > 60
- [4] Price between ₹100 and ₹5000
- [5] Market Cap > ₹5000 Cr AND < ₹25000 Cr
Link to scanner (Example):
👉 Custom Breakout + Retest Scanner
How to Validate Momentum Stocks Before Buying
Once you find a stock using the scanner, follow these steps:
1. Check the Chart
- Is it breaking out of consolidation?
- Is the volume spiking on the breakout?
- Are moving averages aligned?
2. Sectoral Strength
- Is the sector performing well?
- Use NSE sectoral indices (like Nifty Auto, PSU Bank)
3. News or Earnings Catalyst
- Check if news is driving the stock
- Quarterly results, government announcements, etc.
4. Risk-to-Reward Ratio
- Is the stop loss tight compared to the target?
- Aim for at least 2:1 or 3:1
Common Mistakes to Avoid While Scanning
- Overloading Scanners with Too Many Filters
Simpler scans work better. Don’t try to find “perfect” conditions. - Ignoring Price Action
A scanner helps you shortlist, not finalize. Always verify with charts. - Chasing Late Breakouts
Entering after a stock has already moved 10–15% often leads to losses. - Skipping Volume Analysis
Without volume confirmation, breakouts often fail.
Bonus: Free Momentum Scanners You Can Use
| Scanner Type | Platform | Link |
|---|---|---|
| Breakout + Volume | Chartink | Visit |
| RSI + MACD + 20 SMA | TradingView | Built-in screener |
| Fundamentally Strong Momentum | Screener.in | Visit Screener |
| Sector Momentum Stocks | Trendlyne | Explore |
Final Thoughts
Momentum trading can be extremely rewarding—but only if you can consistently scan and act quickly on the right stocks. With scanners, custom filters, and validation techniques, you can take a data-backed approach to finding trades that others often miss.
Remember, scanning is not the end—it’s just the beginning of a profitable trade. Combine it with proper risk management and discipline, and momentum trading can become your edge in the Indian market.
Internal Linking:
If you’re new to momentum trading, check out our foundational guide:
👉 Momentum Trading: What It Is and How It Works
External Resources:
- NSE India Official Website – For checking stock performance and sector indices
- TradingView – Advanced charting and screening platform
- Chartink Scanners – Real-time Indian stock scanners
- Screener.in – For evaluating stock fundamentals
