What are Penny Stocks?
Penny Stocks are those stocks that trade at a very low rate, they have small market capitalization; this is why penny stocks are also known as Nano-cap stocks, micro-cap stocks and small-cap stocks as per the financing of the company.
The determination of market capitalization rate is done on the basis of the product of the current price of its shares and stocks and the number of outstanding shares which is Net Value Asset of shares multiplied by the number of outstanding stocks.
On the basis of this, the firms get a clue in spotting the stock exchanges like-
- National Stock Exchange
- Bombay Stock Exchange
The lower segment of the stock exchange shows the Penny Stocklists.
Features of Penny Stocks-
- Elevated Returns- As compared to alternative securities Penny Stocks add higher returns. They are prominent for growth and development as they are offered by small firms. Therefore, these are perilous prior to the market fluctuations.
- Illiquid- The companies that offer Penny stocks are frameless, so it brings illiquidity for the same. The trading between the stocks becomes negligible.
- Low-priced- The price of penny stocks in India is below 10 rupees. Consequently, an individual can buy it with a small investment and it is pocket friendly as well.
- Uncertain pricing- The penny stocks pricing is very unpredictable, sometimes it can be profit-making or vice versa.
List of top 100 penny stock to buy India in 2021
Summary- Penny stocks have their own world of trading where many companies are betting upon to maximize their profits. In the year 2021, the shares of Proseed India Ltd attained the highest returns with 92.96 % in the month of June. For more details connect to an expert here at ChhotaCFO.