This has its own set of risks and sometimes when the market turns volatile, your gains could erase out completely. ![]() Penny stocks are mostly stocks that are known to help investors make quick returns. This, however, is not the case with all penny stocks. Many penny stocks are stocks of companies with limited historical information, which implies that the investor may not be fully aware of the company’s operations and future prospects may not be very transparent. This means the trader may not be able to buy or sell the penny stock of their choice at all given times-this makes investing in penny stocks riskier owing to their illiquidity. LiquidityĪn important feature of penny stocks is the low liquidity that they offer. In India, the majority of penny stocks have low to moderate market cap. In some cases, stocks that have suddenly fallen in value due to debt issues or corporate governance challenges end up in the penny stocks category. The market cap of penny stocks is generally quite low. Penny stocks as low as INR 1 are also available for trades. In India, the price of penny stocks in India ranges mostly between INR 10 – INR 20. Stocks within the annual trading range of approximately INR 30 have been considered for this analysis.īefore investing in penny stocks, it is particularly important to understand they are low on a range of parameters: Pricingįor a stock to be categorized as a penny stock, it needs to be dirt cheap, essentially the price of a penny that is one-hundredth of a U.S. While investing in penny stocks, investors must remember one has to be diligent in their research and invest their entire corpus in a diversified manner to hedge against potential risks that come with higher return prospects of penny stocks.įorbes Advisor India analyzed the top 50 penny stocks listed on the Bombay Stock Exchange and the National Stock Exchange and chose the top penny stocks that could potentially help investors build wealth. Hence, it is not necessary you would be able to make phenomenal returns when investing in penny stocks. Some penny stocks die out with time and may potentially get delisted resulting in losses. For instance, you may buy a penny stock at a very low price but may not find buyers when you wish to sell it. They are not frequently-traded stocks and often sudden bouts of market volatility determine the returns investors can potentially make on them.īeing low on liquidity, penny stocks could be quite risky to invest in. ![]() Penny stocks are stocks of small publicly-traded companies listed on stock exchanges for a price generally lower than INR 10.
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