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The term penny stocks is more commonly used overseas in the US, UK or Europe, but you could have also heard the phrase in India too. So what are they?
Penny stocks is a loose name for cheap, low-priced shares of small, often newly listed companies.
There are a few different ways to define India’s penny stocks. Some definitions say it’s listed companies with a market cap of less than ₹5,000 crore, which is why in India penny stocks are also commonly referred to as small-cap stocks.
Another definition is stocks with a share price of less than ₹10. However, this is also a rather vague definition as some penny stocks have share prices that go way higher than ₹10.
Investors are often attracted to penny stocks for their cheap prices and potential growth opportunities, though there are risks involved with penny stocks, too.
Some of the typical characteristics of a penny stock include:
|Company name||Stock symbol||Current market price (in ₹)||Total market cap (in ₹ crore)||Industry|
|Bank of Maharashtra||MAHABANK||25.85||16,826.12||Public Sector Bank|
|Dish TV India Ltd||DISHTV||15.25||2,798.70||TV Boradcasting and Software Production|
|HBL Power Systems Ltd||HBLPOWER||47.35||1,312.52||Power Equipment|
|HFCL Ltd||HFCL||52.80||6,845.73||Telecom – Infrastructure|
|Indian Overseas Bank||IOB||20.60||33,531.46||Public Sector Bank|
|Jammu & Kashmir Bank Ltd||J&KBANK||30.55||2,186.73||Public Sector Bank|
|Manali Petrochemicals Ltd||MANALIPETC||79.60||1,362.23||Petrochemicals|
|Morepen Laboratories Ltd||MOREPENLAB||66.00||2,914.87||Pharmaceuticals|
|National Fertilizers Ltd||NFL||69.85||3,340.84||Fertilisers|
|Rail Vikas Nigam Ltd||RVNL||32.40||6,640.79||Engineering – Designing – Construction|
|Trident Ltd||TRIDENT||16.55||8,535.73||Other Textile Products|
|Ujjivan Small Finance Bank Ltd||UJJIVANSFB||32.50||5,565.17||Other Bank|
|Vodafone Idea Ltd||IDEA||9.55||27,585.97||Telecom – Services|
|Yes Bank Ltd||YESBANK||14.00||34,575.77||Private Sector Bank|
Note: These are some examples of Indian penny stocks listed on the NSE. This list is not an exhaustive list nor is it a recommendation for any of the stocks mentioned. The current market prices are updated as of 16 June 2021.
Here are some of the benefits and risks of investing in small-cap Indian penny stocks:
On the opposite side of the scale to penny stocks are blue chip stocks. In comparison to penny stocks, blue chip stocks are large listed companies that have been around for a long time and have a long, stable financial track record.
While penny stocks in most cases pay no dividends, blue chips stocks almost always do.
You could consider investing in penny stocks if:
If you’re keen to invest in Indian penny stocks, here are some tips to help you get started.
This is important for all investments, but particularly higher-risk investments like penny stocks. Blue chip stocks are, by their nature, lower-risk options as they’ve got a long history of strong financial performance.
Before you start buying, decide which penny stocks you’re going to invest in and how much you’re going to invest in each one. It’s also important to decide what price you’d sell at if the shares were to fall and stick to it to avoid the “I’ll just hold a little longer and see if the price jumps back up” mentality. The same applies for gains.
It can be easy to get emotionally attached to a penny stock, as they’re often the underdogs in your portfolio. So when their share price falls and falls some more, you can find yourself making excuses as to why you should keep holding. This is why it’s important to make a strategy, so you leave the emotions out of it.
Penny stocks may appear to be cheap in comparison to other shares listed on Indian stock exchanges like the National Stock Exchange of India (NSE) and the BSE (formerly known as the Bombay Stock Exchange), but don’t base your investment decision purely on this. One factor that influences a company’s share price is the demand for its shares. The less demand from investors, the lower the share price. So some penny stocks may appear to be cheap, but you need to ask yourself why this is.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
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