In India, there’s a different type of securities that are trading in the stock request, and from which, one of these is the penny stock. Investors or dealers are investing in penny stocks to get the benefits of diversification. In this composition, you’ll get to know the description, advantages, disadvantages, pitfalls, and numerous further about the Penny stocks India. Let’s read further about this composition.
What’s Penny Stocks in Trading?
Penny stocks are the kinds of stocks that are traded at a veritably low price and also have a low request capitalization. In India, it’s generally traded at Rs0.01 to 10 per share. These stocks are generally illiquid and are traded at lower exchange boards. These are the ultramicro-cap companies with low request capitalization.
Advantages of Penny Stocks
In penny stocks, not every dealer used to invest in this largely. Regular investors don’t use to invest in similar stocks because of the fear that the fundamentals aren’t clear. Because of the low request capitalization the institutional investors also stay down from investing it into penny stocks.
Due to these reasons, there’s also an advantage that arises when the investor follows his diurnal plan system with discipline also he can make plutocrat from the penny stocks also by learning duly about the fundamentals. If the investor is good at the fundamentals and ready to buy the stocks at a veritably low valuation also he can make gains from the penny stocks also. So, these are the stylish advantages of Penny Stocks.
Disadvantages of Penny Stocks
The disadvantage of penny stocks is that the fundamentals aren’t clear. The investor doesn’t get the proper access to the exploration reports and indeed the credibility of the audited reports is also questionable. They also have extremely low volumes available for the shares that are demanded to be traded.
pitfalls for Investing in Penny Stocks
Because these are generally radical bitsy pots, their compliance with the law and thus the securities request laws could also be casual. This could attract adverse regulative action from the stock exchanges which can crown in the suspense of the instrument from trading.
The other threat is that the Stock Exchanges( BSE & NSE India) put advanced and lower circuits on the businesses to avert inordinate enterprise in them.
Rules for Investing in Penny Stocks
Diversify the portfolio extensively and have a handbasket of penny stocks.
Cover the performance on a diurnal base.
Invest with only petty quantities.
Set a strict loss
Be suspicious of the exploration reports that makeup a picture.
