What Are Penny Stocks and What Are Their Limitations in India?

If you do some online research regarding investing you’re going to find out that, a lot of small public companies are actually making their shares available for trading at some of the lowest prices out there. Now, when those low prices in the beginning actually turn out to have much higher prices this is what we are calling a penny stock.

Learn About Penny Stocks

There are multiple different names about penny stocks out there and the truth is that, all around the world people are actually using them. In India especially people are very interested in penny stocks because basically, they can purchase stocks at very low prices and watch their finances expand over the months or years.

Now, if you’re looking for Indian penny stocks with good fundamentals then you will need to do a little bit of extra research. There are multiple different companies out there that you can invest into. For example, you could invest in ETF if you want to make sure that you’re going to be able to receive a good profit.

It is a good idea for you to search for the best penny stock list 2020 and focus on India in order to be able to find the best penny stocks below 10 rupees shares nse. The best penny stocks for 2020 in India are definitely going to be able to give you a pretty good profit. However, you are always going to want to keep in mind that there are certain limitations.

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Risks and Limitations

The low price of the penny stocks in the market will eventually lead to low capitalisation. They are quite thinly traded which actually means that, you might actually not get the chance to get your very own penny stocks. In India, the biggest problem is that, the current public is not actually very well informed regarding penny stocks which usually leads to 3rd parties outside of India purchasing the penny stocks and controlling a lot of companies around the country without caring so much about the country as they do for their profit.

According to statistics, the number of white-collar crimes has been increased over the past two years in India because of penny stocks. The risk of fraud is quite high and, the investors in penny stocks need to be aware of the fact that, there is a good possibility they will lose their entire investment because of the stocks being highly volatile.

If you have decided that you want to invest in penny stocks pay extra attention to what you are buying and how you’re going to handle your stocks.