Which penny stocks are worth investing in India?
To strip your question down to the basics, here is what you are asking: “How can I spend less than INR 60 per stock and get rich!”
Before I get to the answer, let's assume a few things:
- By potential, you mean stocks that have the ability in the future to give decent returns.
- By now, you are referring to those stocks that have bottomed out and on the verge of a reversal.
Keeping the above in mind,here's how you determine the relevant stocks
- Make a list of all stocks trading in Both the exchanges currently below INR 60
- visit Stock Screener for Indian Stocks: Screener.in
- enter the name of the company
- Check the trend line for the past 5 years
- Look hard at the pros and cons listed
remember that trading in penny stocks is risky and you might loose all capital invested with one bad decision.
If the pros include
- A trading value greater than its book value,
- A growth rate of at least 5 % in the last 5 years,
- Increasing promoter holding,
- High ROE &
- High interest coverage ratios
you might consider buying the stock. However remember that these stocks might rise or fall at the whims of operators as most are traded circularly and should only be considered for long term holding of 3 plus years.
Wrote By - Vinay Raghavendran
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There are near to 1000 penny stocks in India listed on BSE mostly but only a few on NSE and only a few are traded on the exchanges as of today. It is important to clarify the meaning of penny stocks.
List of all stocks under Rs. 1 as of Oct 3 2016: Stocks under Rs 1
List of all stocks under Rs. 10 but above Rs. 1 as of Oct 3 2016: Stocks between Rs 1 & 10
Penny stocks are shares of companies that have market capitalization less than Rs.100 crore and each share trading below Rs.10. There are more than 25% of total stocks listed as penny stocks on the BSE and 10% on the NSE. There were over 670 stocks in the Bombay Stock Exchange (BSE) that were trading below Rs 10 on Feb 16. Unitech, Zylog Systems, Velan Hotels, 3I Infotech and Vardhaman Laboratories are some of the stocks, which were trading below Rs 10. Stocks such as Dynacons Technologies which were trading at Rs 0.38 two years back, surged 4,097 per cent, to Rs 15.95 till Feb 16, 2016. As on December 31, 2015, promoters holding in the company was at 60.17 per cent.
Normally, all investors think that penny stocks look like a good grab as the downside seems limited. Penny stocks usually belong to companies with low quality management or negative future outlook. These penny stocks suddenly spring to life with huge volumes when there is an announcement or turnaround in the market scenario, sector or stock specific improvement. There are penny stocks and penny sectors - meaning the sector itself is considered as penny stock sector due to various reasons.
First let me show you the penny stocks and then the penny sectors. I am giving a table of some penny stocks which have given more than 100% returns in less than 150 days.
The reason why penny stocks exist or some stocks become penny stocks is because of PPG: people (management), profitability or growth prospects. Any change in either of these three parameters prompts them to start moving higher or lower.
At the same time there are many stocks which have been reduced to penny status or close to 52 week low. This is today’s list for 52 wk lows.
Now coming to penny sectors, a good example of penny sectors was the sugar industry. This industry was not doing well because of the drought situation and low rainfall in 2014 and 2015, which resulted in all time low for these stocks. No one was interested in these stocks at all and look what they have delivered in less than 6 months. Though they all might not be penny stocks, it was called the penny sector.
Hope I have provided enough information to aid in your search for penny stocks or penny sectors.
Source and Image credits:
Wrote By - Gopal Kavalireddi
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Beware of penny stocks. They can make money for you, but if it goes wrong they will only be of 6–9% of your investment. suppose if you took buy position in penny stocks like tuni textile, Trinity trade link 8–10 months ago your Investment of 1000 rs is only of 100 rs in today’s date. But penny stocks can give you good returns like
- Morepen labs from 2 to 25 in 2015
- Marksans Pharma from 3 to 100 in three years
- Indosolar from 1.50 to 15 in 2014
- Prakash Constrowell from 2 to 20 in 2016 (well this is new in the list currently in uptreans)
Now come to penny stocks you can buy
- 3i Infotech now trading at 5.70 for target of 13–16 in 7–9 months
- Sybly Industries now trading at 12.50 for target of 20 in 4–5 months.
One can visit my Facebook page for more updates City Investment & Consultancy Services or you can whatsapp me on 9560915366 for market related updates.
Wrote by - Divish Saini
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Penny does not have much value so do penny stocks.
Investment in small cap companies offer much better returns. But do that through reputed Mutual Funds with good track record and very good CRISIL rating. Qualified professionals manage your money. SEBI (Securities Exchange Board of India) regularly monitors these. Expense ratio is only 1% to 2 %.
TAX BENEFITS- Units redeemed after 12 months are exempt from capital gains tax. Dividend income is Tax Free too. You can redeem all or part of your investment any time at the current NAV value.
Systematic Investment Plan (SIP) is the best way to invest. A fixed sum is invested every month. More units are bought when the price is low and fewer units when the price is high. This reduces the impact of market volatility. You can update/cancel SIP anytime.
HOW TO BUY MUTUAL FUNDS:
SEBI has prescribed certain requirements relating to KYC "Know Your Client". This entails In-Person Verification (IPV), verification of identity and address, financial status, occupation etc.
Click on the following link to know how to invest in MF: Know Your Client (KYC)- Birla Sun Life Mutual Fund
DIRECT PLANS: Investors can now directly invest in mutual fund schemes without involving distributors or brokers. They need to visit AMC website. There would not be any distribution fees. Due to this, expense ratio would be lower and returns higher between 0.5% to 1.5% p.a., as compared to regular plans.
For buying Mutual Funds directly VISIT THE WEBSITE OF THE CONCERNED AMC Asset Management Company, like Birla Sun Life, DSP Blackrock, Franklin Templeton, Reliance Mutual Fund, Axis Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, etc
Some good Equity Mutual Funds in different categories and their approx compounded annual returns in previous 3 years are mentioned below. However this return is a dynamic figure and one must check most up to date figure.
Large Cap Funds . compounded annual returns in previous 3 years
SBI Blue Chip Fund …………… …………………………27.1 % (Crisil Rank 1)
Birla SL Frontline Equity (G) Direct…………….… 24.7 % (Crisil Rank 1)
Birla Sun Life Top 100 (G) ……………………………25.7 % (Crisil Rank 1)
Kotak Select Focus Fund – Regular ………..… 28.2 % (Crisil Rank 1)
Franklin India Oppor. (G) ………………………….. 23.7 % (Crisil Rank 1)
Balanced Funds -- compounded annual returns in previous 3 years
HDFC Balanced Fund ----- 25% (Crisil Rank 1)
Tata Balanced Fund - Regular (G) -22% (Crisil Rank 1)
L&T India Prudence Fund (G) ----- 22% (Crisil Rank 1)
SBI Magnum Balanced --------------21.5% (Crisil Rank 1)
Small Cap Funds –--compounded annual returns in previous 3 years
DSP-BR Micro Cap Fund - RP -------52 % (Crisil Rank 1)
Franklin (I) Smaller Cos (G) -----------43.4 % (Crisil Rank 1)
Mirae Emerging Bluechip Fund (G) 43.3 % (Crisil Rank 1)
Diversified Equity Funds -compounded annual returns in previous 3 years ICICI Pru Exp&Other Services-RP (G) ------ 35.5 % (Crisil Rank 1)
L&T India Value Fund (G) ----------------------36.3 % (Crisil Rank 1)
Principal Emerging Bluechip(G) --------------38.7 % (Crisil Rank 1)
ELSS Funds ---- compounded annual returns in previous 3 years
Axis Long Term Equity Fund (G) ----- 32 % (Crisil Rank 2)
Birla SL Tax Relief 96 (G) ----------------30.1 % (Crisil Rank 1)
Reliance Tax Saver ---------------------- 34.1% (Crisil Rank 3)
SBI Tax Advantage Sr 1 ---------------- 28 % (Crisil Rank 1)
{Investment in ELSS (Equity Linked Savings Scheme)is deductible from taxable income under section 80 C within the overall limit of Rs 1,50,000. There is a lock in period of 3 years}
Disclaimer: This may not be treated as an official advice from an expert. I am an investor myself and and speaking from personal experience and study.
A word of caution: Past performance is not a guarantee of future performance. Equity based funds are subject to market risks. Be advised to carefully study all the related information before investing in these schemes.
Some of the web site - moneycontrol, mutualfundindia, nseindia
Wrote By - Dev Kumar Airon
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Trading this way, will not get you anywhere. If you want to focus on penny stocks, then take some time and find out all you can about penny stocks and how millions are made in penny stocks.
Write a plan on what you want to accomplish with your penny stock business.
Then follow the plan.
The difference between winning penny stock traders and losing penny stock traders is a plan. The profitable penny stock traders have a plan and they follow it. The losing traders have no plan, if they do, they don’t follow the plan.
I trade only spot forex, I don’t trade penny stocks. If you want to know which forex pair has potential every month click here [1]
Footnotes
Wrote By - Caroline Mbi Ayuk
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It really depends on the company and the valuation. If, say, net working capital (current assets - total liabilities) is greater than the market cap, the stock may be a worthy investment, but make sure you do research on the industry, the history of the company's profitability, etc. Also consider using the cap rate as a screener (after or pre-tax operating income divided by enterprise value), which essentially measures what an investor would receive in operating income if he/she invested in the company. If you do come across a penny stock for a company with attractive valuations and qualitative characteristics, the company may be an attractive acquisition target. It is quite rare to find such qualities in penny stocks, but they are out there. Check out the OTC market website for a screener; finviz is also good. Best of luck!
Wrote by- Anthony Thorpe
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Can't say it is worth to invest in penny stocks. But investing in good companies, which are trading at low levels, considered as undervalued, good growth prospects are better to invest. The best thing about penny stocks is, we can invest some good amount of money to buy larger number of shares as compared to others. But don't think that, every penny stock is a good one to earn lot. Moreover in India, we've circuit filters by the exchanges(means, those are limited to 5%,10%,20% per day), and recently, they're planning to limit the prices for year also(not sure, whether it is implemented or not), so don't expect heavy changes overnight, as you see in U.S. exchanges.
SOME USEFULL STUFF :
We have some penny stocks which did well and are doing good, companies like Ashok Leyland- I'm tracking it from Rs.14 and Rs.96,
SKM Egg Products- It went to Rs.225 from Rs.6(Happened within a year or so)
Mic Electronics- Went to Rs.29.5 from Rs.5 or so(Happened in one year).
Also, some government companies turned multibaggers(it may take some 10-15 years),
and we have few penny stocks going worthless.
Finally, you've to choose companies with good management good business, and good promoters.
If you wish to have any mentor for this, I know one person who turned as a Millionaire, trading penny stocks and he is Timothy Sykes. (Do mind that, he traded not in Indian Penny stocks).
Disc: I'm not suggesting any specific companies, or persons. Please gain sufficient knowledge before entering into any kind of financial instruments.
Wrote By - Allaparthi Sai SriHarsha
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For stocks under Rs.1 , Buy .
- RASOYPR
- REIAGROLTD
- BIRLACOT
- WINSOMEDJ
And I have few other stocks in my penny stock list.
I have given few suggestions on long term investment view in my past answers.
Invest in stocks at your own risk .
I suggest you to get a ZERO Brokerage account from THIS Broker and buy some of these penny stocks and wait for few years.
What are penny stocks ?
Penny stocks are shares of companies that have market capitalization (market capitalization-the total value or worth of the company) less than Rs.100 crore and each share trading below Rs.10. Do you know how many penny stocks trade on BSE or NSE. It’s 25% for the BSE and 10% for the NSE.
Penny stocks can give you good return if you choose right stock .
E.g.
Tips :
No.1 Get a Zero Brokerage Account from a Good Discount Broker. [ Because you are going to hold penny stocks for at-least 2–3 or more .
No.2 Do not buy in large quantity - maximum 10% of your portfolio.
No.3 Buy stocks with high volume.
No.4 Do not try to buy more at dip price.
Wrote By - Arya Jindal
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Penny stocks are the shares of companies that have market capitalization less than Rs. 100 crores and shares trading below RS. 10 on exchanges. There are lots of such stocks that are trading publicly and most of them are on BSE with very few on NSE.
Investing in penny stocks is very risky as they are never considered to be quality stocks. But still a lot of people invest in them because of their lower downside risks. The penny stocks which became multibaggers are very less in number and there are instances in the past where the Stock exchanges have either suspended the scrips due to various reasons or imposed upper and lower circuit limits to control speculation. It’s more of gambling than investing.
What ever the company might be, we must look at the value of share rather than price of the share before investing. Also the number of outstanding share of some of these companies are very less and even others are also not traded frequently, which questions their liquidity. There is also big question on some of these company’s “Going concern” and may suddenly vanish. It is not enough if couple good ratios of these companies are good to invest. Look at the management, people and practices and invest only if you have confidence in them and the sector in which it is operating.
Wrote By - Durga Sai Prasad
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Introduction to Penny Stock
Penny stocks, also known as cent(Dollar Terms) stocks in some countries, are common shares of small public companies that trade at low prices per share.
If I consider this as definition for “Penny Stock”. Any stock which is trading below INR 70 can be known as “Penny Stock”
Analysis of Indian Stocks below INR 70 with potential to become multi-dollar stocks.
The Query is given below :
Enterprise Value to Total Income to Firm Margin <15
AND Latest Annualized Return on Equity >12
AND Return on capital employed >8
AND Firm Margin >0
AND Net profit >0
AND Net Profit latest quarter >0
AND Current price <70
AND Volume >100
AND Current price >0.05
AND PB X PE <20
1 - Vijaya Bank CMP INR 63.4
2 - Firstsour.Solu. CMP INR 42.7
3 - PTC India Fin CMP INR 38.65
4 - Meghmani Organ. CMP INR 38.45
5 - Nitin Fire Prot. CMP INR 22.75
6 - Tour. Fin. Corp. CMP INR 56.55
7 - Lycos Internet CMP INR 9.55
8 - Sunil Hitech CMP INR 11.4
9 - Gallantt Metal CMP INR 40.65
10 - Pincon Spirit CMP INR 64.95
11 - Sumeet Inds. CMP INR 32.75
12 - Manaksia Indus. CMP INR 28.9
13 - Sakthi Finance CMP INR 33.3
14 - Lypsa Gems CMP INR 63.35
15 - Winsome Textile CMP INR 65.75
16 - 20 Microns CMP INR 35.75
17 - Arihant Capital CMP INR 50.4
18 - Lancor Holdings CMP INR 25.85
19 - Prime Urban CMP INR 38.6
20 - Ishan Dyes & Ch. CMP INR 43.75
21 - Parnax Lab CMP INR 54.6
22 - RACL Geartech CMP INR 36.7
23 - TCI Finance CMP INR 23.9
24 - Akar Tools CMP INR 55.5
25 - Prakash Woollen CMP INR 28.45
26 - Helios Matheson CMP INR 8.97
27 - ITL Inds. CMP INR 60.5
28 - Prithvi Softech CMP INR 36.05
29 - Girdhari.Sugar CMP INR 10.31
30 - Sh. Karthik Pap. CMP INR 10.23
31 - Vippy Spinpro CMP INR 33.25
32 - Charter. Capital CMP INR 60
33 - Solitaire Mach. CMP INR 36.85
34 - CG-VAK Software CMP INR 31.45
35 - Incap CMP INR 30.7
36 - Hemang Resources CMP INR 11.87
37 - Cosboard Inds. CMP INR 35
38 - Vinyoflex CMP INR 33
39 - B N Rathi Sec. CMP INR 26.6
40 - Haryana Texprint CMP INR 2.66
41 - Swasti Vin. Art CMP INR 3.03
42 - Gothi Plascon CMP INR 11.2
43 - Mansi Fin.(Chen) CMP INR 30.85
44 - Coastal Corporat CMP INR 37.75
45 - Rammaica (India) CMP INR 8.65
46 - Sugal & Damani CMP INR 9.2
47 - J R Foods CMP INR 3.15
48 - Peeti Securities CMP INR 6
49 - Ekam Leasing CMP INR 4.69
50 - Mini Diamonds(I) CMP INR 3.93
Wrote by - Tharendra Lunia
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Investing in penny stock needs huge amount of risk.
But the very basic of stock market is “higher the risk,higher the return”
Investing well in fundamentally solid penny stocks can be lucrative,the unfortunate fact is that many of the bad things you have heard about penny stocks are all too real.
1. Commission
The first rule of investing in penny stocks is how much brokerage you are paying.
Invest in penny stocks through some discount brokerage firms.
The best known discounts brokers in India are Zerodha, RKSV and Tradejini (Rs 20 per trade).
The basic logic behind this is that most of the penny stocks cost below 5 rs,if a share cost 10 paise and if you invest through firms like sharekhan or kotak ,you will end up paying 10 paise per share.
So if you invest 2000 Rs in penny stock, you will end up paying 2000 Rs as brokerage,which is of course ridiculous.
2. Research
Penny stocks are low quality companies,involving high risk.Early investor,usually impatient to make millions, enter these stock to make a fortune.They usually end up having nothing.
So " A Quality Research" will save you from making the same mistake.
3. Strategies
Scaling In and Scaling Out
I’m a proponent of scaling in and
scaling out of positions in penny stocks, which simply means buying and selling in portions rather
than a single trade. For example, if you want buy $3,000 worth of a specific penny stock, you may
want to spread the purchases out over three or four trading orders and enter them over the course
of weeks or months.
Averaging Up . . . Not Down
If you bought $1,000 worth of a penny stock
at 90¢, why not buy another $1,000 worth now that it’s at 30¢? You would then have an average
cost per share of 45¢, with a total investment of $2,000 into what is currently a 30¢ penny stock.
This type of reasoning can get you into a lot of trouble, though, and the general sentiment on the
markets is that averaging down is simply throwing good money after bad.
However, the fact remains that you got the investment wrong in the first place, and a strategy of cleaning up your mistakes by averaging down will eventually catch up with you.
4. Know when to take a profit
When trading volume declines: When shares trade much higher but then see a marked dropoff
in trading volume, the penny stock may be about to take a fall. Most upside gains are fueled
by, and can only exist with, a high degree of investor activity. When that buzz goes away, the
share price often fails to maintain its lofty new price.
To beat the profit-taking stampede: When a penny stock goes up dramatically in price over a
short time period, a number of investors usually sell their shares in order to take these
newfound profits. This selling can drive shares right back down, and you may do well to get
ahead of that price fall.
Wrote by - Divya Patel
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