The Best Penny Stocks in India

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15 May, 2021

8 min read

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The Best Penny Stocks to Invest in India - Smart Money
Investing and trading on the stock market has the potential to generate profits.

Introduction

That being said, investors are oftentimes required to possess a large amount of knowledge and experience in order to navigate the stock market with ease. Moreover, investing in the stock market can be an expensive pursuit that not all might be able to afford. The fact that there is no guarantee on investments made makes the risk of investing an added barrier. Growing access to the internet however has changed the game as it means more individuals have access to information. Varied sources such as YouTube and investing websites provide invaluable knowledge to those seeking to learn how to operate the stock market. Armed with this knowledge, new investors can step into the world of stock markets with more confidence. Penny stocks, in fact, provide the perfect training ground for them.

What are Penny Stocks?

Penny stocks ordinarily refer to the stock of small companies in India that are ordinarily traded at ₹10 or less per share. A large majority of Indian penny stocks are traded via over-the-counter transactions (or OTC) although some are compliant with the stock exchange regulations and can be traded on the same. Companies that have penny stocks are more often than not small in size. Ordinarily, their stock is traded on an infrequent basis which results in a lack of liquidity as they don’t generate a large number of buyers in the marketplace. Owing to the lack of buyers, investors may have a hard time selling their stock. Moreover, the lack of liquidity of penny stocks can result in it being hard to determine a price that correctly indicates the market. These factors all add to the speculative nature of penny stocks.

Why Trade in Penny Stocks?

Considering the previous disclaimers, penny stocks still serve a number of uses. They make great investment opportunities for those just beginning to trade on the stock market. Traders can experiment with greater flexibility and new investors can use penny stocks to learn how to trade. Their low price point makes them an affordable option and investors can gain solace in knowing that their stocks minimize their potential losses. Owing to the speculative nature of penny stocks, investors of the same do not necessarily need to consult professional stockbrokers prior to trading with these stocks. Additionally, technical analysis isn’t needed prior to trading with these stocks. While most penny stocks don’t see their market price move at a quick pace, the penny stocks which do, ordinarily make big price moves within days rather than years. Owing to their low price, penny stocks allow investors to purchase a greater number of shares for the given sum of money they are willing to invest. Had these investors invested the same money elsewhere, they might not have been able to purchase as many shares. When investors of penny stocks want, they can participate in staggard buying or selling penny stocks in order to add to or drop these shares. Penny stocks can transform into multi-baggers which adds to their appeal. This means they are capable of providing returns equivalent to multiples of the original amount invested.

The Best Penny Stocks in India –

The Indian stock markets are home to several viable penny stocks which investors and traders alike can take advantage of. Some of the best penny stocks presently available have been mentioned below.

Morepen Laboratories – Classified as a pharmaceutical company, Morepen laboratories has expanded its enterprises vastly and is no longer the producer of a sole product alone. It has three exceptional manufacturing sites located in Himachal Pradesh. Of these, the primary site which produces Loratadine, an anti-allergy drug, has been approved by the United States Food and Drug Administration (or USFDA). Operating with a viable debt to equity ratio of 0.05, it has within its control over 90% of the market share of generic Loratadine in the American market.

Dish TV India Ltd. – Operating within the broadcasting and cable TV sector, the stocks of the same have operated as a horizontal line within the market for quite some time. Their revenue growth is expected to grow in the upcoming year indicative of a positive future ahead provided, of course, their expenses grow at the same level. 

HBL Power Systems – This company has been functional for the past 40 years and is oriented towards engineered products and services. HBL originally sought to identify and fill technology gaps that persist with the country. This resulted in them creating Aircraft batteries which were so well received that they now serve as recognized and respected suppliers of specialized batteries and power electronics in the country.  Their stock has an average daily volume of 4 lakh shares.

Vodafone Idea Ltd. – Recognized as one of India’s primary telecommunications service providers, it has a revenue market share of roughly 15.9% of the Indian mobile telecom industry. While Vodafone serves as the third-largest wireless operator, its competitors Bharti Airtel and Reliance Jio provide cutthroat competition. Investments in these penny stocks are therefore very speculative and require a high-risk tolerance.

NHPC India – Serving as a Mini-Ratna Category I undertaking that has been started by the Government of India, it has a prominent position in the realm of hydropower development in India. NHPC has as its primary goal the development and usage of a synthesized network of hydroelectric units operating with efficiency across the country. What makes this company a viable investment is that it has a low debt to equity ratio and an acceptable dividend yield of approximately 6.17%.

Things to Remember When Trading with Penny Stocks -

The high levels of risk associated with penny stocks stem from their higher level of volatility. This means that individuals have the potential to score high rewards but the gamble they must take for the same is big. In the event that they purchased their penny stocks by buying on margin i.e., with the aid of borrowed funds, they have the potential to lose more than the original investment they made. Investors and traders of penny stocks must have realistic expectations for such shares and should recognize that they have low trading volumes accompanied by high-risk investments. 

Angel One serves as an exceptional platform via which investors and traders alike can stay abreast of news pertaining to the Indian stock market. It provides users with in-depth research on how the market is functioning and what stocks to look out for.

How would you rate this blog?

Comments (2)

Rohit Sharma

25 Jul 2021, 08:40 PM

very good

Jharan Dev

27 Jun 2021, 02:39 PM

Good

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