Penny stocks are stocks of small publicly-traded companies listed on stock exchanges for a price lower than INR 10. They are not frequently-traded stocks and often sudden bouts of market volatility determine the returns investors can potentially make on them.
Being low on liquidity, penny stocks could be quite risky to invest in. For instance, you may buy a penny stock at a very low price but may not find buyers when you wish to sell it. Some penny stocks die out with time and may potentially get delisted resulting in losses. Hence, it is not necessary you would be able to make phenomenal returns when investing in penny stocks.
Forbes Advisor India analyzed the top 50 penny stocks listed on the stock market indices, NSE and BSE, in India and chose the top five penny stocks that could potentially help investors build wealth.
While investing in penny stocks, investors must remember one has to be diligent in their research and invest their entire corpus in a diversified manner to hedge against potential risks that come with higher return prospects of penny stocks.
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