What are Penny Stocks in the Indian Stock Market?
Penny stock is the first love of a stock market beginner due to its low stock market price and highly explosive returns. However, there are several things an investor must need to know before investing in a penny stock. Furthermore, today we are going to discuss the pros and cons of penny stocks. stock market
What are penny stocks in the Indian Stock Market?
Penny Stock are those Stocks that get trade at a cheap price in the stock market mostly price less than Rs 10. These Stocks have a very low market capitalization under RS 500cr and in India, the liquidity of the penny stocks is also low and they are also speculative in nature. stock market
These are even smaller than the small-cap companies that’s why these stocks are known as microcap company stock. However, one can find several penny stocks listed in Indian stock market exchange both NSE, BSE. stock market
PROS of Penny stocks in India
Penny stocks in the Indian Stock market are very potential rewarder to its shareholders. The returns of penny Stocks are quite high if you are able to get a potential penny stock. Many penny stocks turned out multi-bagger for the people who invested in them. stock market
These Stock are quite able to make volatile moves. There are a good number of penny stocks that have even given multiple time returns within a few months period, and due to their less price, investors can buy a large number of penny stocks. stock market
CONS of Penny stocks in India
The list of cons of the penny stock in the Indian stock market is enormous compared to its pros the most common Cons are listed below. stock market
High Risk: - These stocks are perilous stocks because only a few numbers of penny stocks outperform in the market, many of the penny Stocks get bankrupt and shut down their business.
These stocks have very low liquidity:-The liquidity of penny Stocks is very low in The Indian Stock market the trouble is from both sides buying and selling, sometimes when you would want to buy it you would not get any seller and in case you bought the stock and you want to sell it then you would not get any buyer for that.
Large bid-ask: - In the Indian Stock market, a large bid–ask spread in these stocks.
Information: - Only limited information is provided to the public.
Prone to scams: - There are quite numerous past-done scams in the penny stocks.
Sudden delisting and regulatory scrutiny: - many times before the penny stocks have been delisted from the stock exchanges of the Indian Stock market because these stocks are always under regulatory scrutiny of SEB
Who should buy penny stocks?
Penny stocks are very Risky Stocks so only suitable for investors who are ready to take that much risk to get higher returns.
The conclusion from this article is that yes there are both the kind of investors in India who have earned so much from penny stocks and some who have destroyed their wealth due to penny stocks so always conduct your research before investing in any penny stock. stock market