What Are Penny Stocks? Best Penny Stocks in India Right Now

Topics

Introduction

Warren Buffet once said, “I made my first investment at age 11. I was wasting my life up until then.” We cannot be dependent on one income. Investing in the stock market can create a second income. Penny stocks are a great option for students who want to invest their pocket money. They are also suitable for people seeking to learn to trade.

As per market experts, even though there is a lot of chaos in the stock market, a few penny stocks have returned whopping profits in the first half of 2022. Invest in penny stocks with a positive outlook. You may gain instantly or in the long term if you invest in the best penny stocks in India in October 2022.

What Are Penny Stocks?

To be viewed as a penny stock, the stock should meet two terms:

Market price:It should have a market price of around ₹10.
Market capitalisation:It should have a very low market cap, which is the total value of a company’s shares.

However, penny stocks are highly volatile and have low trading volumes. This means the stock is quite risky due to the company being too new or having a negative reputation.

So, be careful but not fearful.

Risks Associated with Penny Stocks

Penny stocks are risky and offer higher losses, but higher profits as well. Research the stock well before investing in it.
Watch out for these!

Wide bid-ask spread:There is a wide gap between the Ask and Bid rates. This means the gap between the price a bidder is willing to pay for the stock and the minimum price the seller is willing to accept is too huge.
Illiquidity:An illiquid stock is difficult to transform into cash. Penny stocks are often traded in low volume. So, when an investor wants to sell stocks, there may not be buyers. Similarly, when the investor wants to buy stocks, there may not be sellers.
A sudden and unexpected drop in value is possible with an increase in trade volume.
Trade-to-trade (T2T) stock:The shares purchased or sold should be compulsorily delivered. Intraday trading (buying and selling the stock on the same day) is not possible.

What Is a Good Penny Stock?

A penny stock can be considered if:

The company has a promising business model in line with the country’s industrial and economic needs.
The company has a detailed management plan, clear vision, mission, and targets.
The firm’s promoters (founding shareholders) have high stakes in the company. This will prompt them to drive the firm.
The firm’s financial ratios are strong.

Best Penny Stocks to Invest Now in India

1. Vodafone Idea Ltd.

Current Market Price – ₹ 8.5
Market Cap – ₹ 27,622 Cr
Industry – Telecom

Vodafone Idea Ltd. is a telecom service vendor that provides voice and data services (2G, 3G, and 4G). The company offers communication services to private and government agencies and provides broadband networks for homes and offices.

2. Indian Overseas Bank

Current Market Price – ₹17.15
Market Cap – ₹ 32,418 Cr
Industry – Banking

Indian Overseas Bank offers services such as deposits and foreign exchange. Retail banking schemes like MUDRA and Mahila Savings Account are also available. The bank further provides agricultural loans to small farmers.

3. Bank of Maharashtra Ltd.

Current Market Price – ₹17.95
Market Cap – ₹12,014 Cr
Industry – Banking

The bank provides services like treasury, corporate banking, and retail banking. It also offers e-payment of taxes, credit cards, doorstep banking, and pension schemes.

4. Eros International Media

Current Market Price – ₹36.65
Market Cap – ₹364 Cr
Industry – Entertainment

The media and entertainment firm is engaged in film production and distribution. It offers services like music releases, theatrical distribution, and DTH licensing. Eros produces content in all Indian languages and is now working on an OTT platform.

5. Morepen Laboratories Ltd.

Current Market Price – ₹27.55
Market Cap – ₹584 Cr
Industry – Pharmaceutical

Morepen works in manufacturing, developing, and marketing APIs. The company manufactures a wide variety of drugs. Its health products include room air purifiers, breathe-free vaporisers, nebulisers, and stethoscopes. Dr Morepen Ltd. and Total Care Ltd. are subsidiaries.

6. Swiss Military Consumer Goods

Current Market Price – ₹19.95
Market Cap – ₹265 Cr
Industry – Capital Markets

The company trades and markets lifestyle products such as travel gear, baggage, sunglasses, electronics, and protective masks. It also produces men’s innerwear and electronics.

7. Shanti Educational Initiatives

Current Market Price – ₹67.40
Market Cap – ₹1,694 Cr
Industry – Consumer Services

This company provides education solutions from playschool to grade 12. Its learning units include Shanti Asiatic schools, Shanti Junior and Shanti Hopscotch. The initiative has over 25,000 students across the world. Shanti Educational Initiatives provides app-based learning, affiliations, course design, human resources, training, and campus layout.

Penny stocks in India are short-term investments. They are affordable for even new and small investors. If you’ve been on the fence about investing, this is your chance to start small and learn. You can also take the advice of an expert underwriter to understand risks.

Conclusion

Frequently Asked Questions

Q1. How is penny stock trading done?

First, identify a stockbroker. They will assist you in opening trading and Demat accounts. You can use a trading account to buy and sell shares. The Demat account allows you to digitally store the shares you hold.