Best Penny Stocks in NSE: What Are the Various Benefits of Investing In Them?

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Best Penny Stocks in India: What Are the Various Benefits of Investing In Them?

Best Penny Stocks in NSE: An Overview

Investors are generally advised to invest in long-term stocks and apply the “buy and forget” strategy to reap maximum benefits from stock market investments. This is the reason why most investors prefer investing in well-established blue-chip companies that involve less risk and offer assured returns in the form of capital gains and regular dividends. However, to maximize passive earnings, investors can also invest in penny stocks or cent stocks, which have the potential to offer high returns in less time. Another advantage of penny stocks is that they help in diversifying your portfolio. 

In this article, we will discuss what are penny stocks India NSE, and the benefits of investing in them with a list of penny stocks NSE. Keep reading!

What Are Penny Stocks?

Penny stocks NSE, as the name suggests, are stocks that are priced very low. They are available for as low as Rs. 50. They are illiquid and have very low market capitalization as compared to other stocks. A majority of investors don’t know about these stocks because either they don’t know about them or have very unreliable information about investing in penny stocks. Nevertheless, these are multibagger stocks that are known for offering impressive returns over a short period. 

Why Are Penny Stocks Priced So Low?

NSE penny stocks are priced super low for the reason that the investors buying them have only one motive for them: buy, make profits, and exit as soon as possible. Another interesting thing about these stocks is that they do not always comply with the regulations of stock exchanges. In fact, they are not even transparent about their functioning and operations. They only move when there is some trend in the market. Their prices soar as a result of trends and speculations. However, there are some very legit penny stocks that are offered by reputed companies. We will discuss them soon in this article. Keep reading. 

Top Penny Stocks in India: Benefits of Investing in Them

Below are the reasons why you should consider investing in penny stocks in India:

1. Low Prices

Perhaps the biggest benefit of investing in penny stocks is that they are highly affordable. They can fit any budget as they don’t require a huge capital. This is highly beneficial for low-budget investors.

2. Higher Gains

Penny stocks have the potential to offer higher profits to investors. Note that the companies that are offering them are still in a growth phase. They hold a greater scope for growth and expansion. This simply means that the value of these stocks can rise much higher than the stocks of well-established companies. 

Moreover, even if the price of penny stocks doesn’t increase much, their profit margin would be very impressive. For example, if you have 1000 shares, each of Rs. 5, then your total investment is Rs. 5,000. Now, if the price of a stock rises to Rs. 8 someday, you’ll be able to make a profit of Rs. 3 per share. This will make your investment jump to Rs. 8,000 from 5,000 in a single day. 

Best Penny Stocks in NSE

To help you select the best penny stocks in India, here is a well-curated penny stocks list in NSE:

StockIndustryMarket CapLatest Price
Vodafone Idea LtdTelecomRs. 32,770 CrRs. 6.80
Alok Industries TextileRs. 6,070 CrRs. 12.2
Morepen Laboratories Pharmaceutical Rs. 1,310 CrRs. 25.50
Suzlon EnergyEnergy and PowerRs 12,110 CrRs. 8.40
Indian Overseas BankBankingRs. 45,740 CrRs. 24.05

(Data as of 24 Feb 2023, Source: Google Finance)

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns

So, this was the penny stock list NSE. Now, let’s discuss the important factors to consider while identifying the best penny stocks. 

Top Penny Stocks in India: How to Choose Them?

Penny stocks are highly volatile in nature. Therefore, they should be selected very carefully. Below are some factors that need to be considered at the time of buying penny stocks in NSE:

Do Your Research

Companies that offer penny stocks are very small and are in their development phase. Although they are listed on the National Stock Exchange, they are not very popular. So, before investing in these stocks, it is very important to research them. This will help you in understanding their background, financial situation, and most importantly their performance. This step will make sure that you don’t end up with companies that are not performing well and are very close to bankruptcy. 

Diversification is the Key

Penny stocks are illiquid and volatile in nature. Therefore, instead of investing all your capital on a single penny stock, consider diversifying your investment by putting your money in multiple stocks. For this, first decide how much do you want to spend on penny stocks and then divide this capital evenly across multiple penny stocks. 

Place a Limit

The cheap prices of penny stocks can be very intimidating for the investors. However, don’t lose your self control and buy a lot of penny stocks. They involve higher fluctuations and hence, it is recommended to buy only 2-3 good penny stocks after performing proper research and analysis. This will offer you higher profits without exposing you to a lot of market risk. 

Consider Short-term Investment

Follow a short-term strategy when investing in penny stocks in India. These stocks can’t be predicted and their performance entirely depends on market trends. So, there is no point of staying invested in them for a longer term. A good idea is to buy them and exit as soon as you make decent profits. 

Don't Follow Trends Blindly 

Penny stocks are among the hottest talks of the stock market and these rumours dictate their price. Traders take advantage of this and buy these stocks in bulk to display their high demand. Because there is not much reliable information available on penny stocks, inexperienced investors see this huge demand and invest their money blindly. Once the stocks reach a good value, the trader sells them and investors lose their hard earned money. So, do not follow the herd and invest wisely taking into account all the pros and cons.  

Key Takeaways

Penny stocks have become a popular investment option because they are cheap and offer high returns in the very short term. But the fact can’t be ignored that they are subjected to market fluctuations. Hence, should be selected wisely. To make it easier for you, we have offered a list of the best penny stocks listed on NSE in India. We hope it helps you in making a wise decision.
This is not an investment advisory. The blog is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. The performance and returns of any investment portfolio can neither be predicted nor guaranteed. 

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