Penny Stocks under Rs 5 in 2024

Posted by : Ketan Sonalkar | Fri Mar 29 2024

Penny Stocks under Rs 5 in 2024

Penny Stocks under Rs 5 in 2024

In the stock markets, where there are various opportunities and risks, there is one segment that often catches the eye of investors- PENNY STOCKS.

To define a penny stock, there is not a single definition. Penny stocks are usually traded at a low price below rs10, ranging from as low as Rs1 to as high as Rs50. You can decide what you feel like the good price band you want. If chosen wisely, these top penny stocks have the potential to become Multibagger Penny Stocks for 2026!

Top penny stocks in India are known for their HIGH-RISK, HIGH-REWARD factor. Penny stocks are also referred to as micro-cap stocks, which means the company with low market capitalization. Priced at a very low rate, top penny stocks offer substantial returns. They are attractive because they might have large price swings, giving traders both opportunities and risks. These stocks are often characterized by their high volatility, making them suitable for traders seeking short-term gains. Investors usually think that with a stock price of Rs1000, they can buy 50 stocks with Rs50000.  But in the same case if their penny stock is of Rs 4-5, then they can buy 12000 stocks with that same Rs50000, so more no. of shares. Top Penny stocks give multifold results. They can go from zero to hero. You just need to invest in the right stocks. 

Finding a good penny stock is like finding a diamond in the rough. It is worth considering whether investing in those Top penny stocks is worth it or not. It depends on the company’s fundamentals, background, and products. Don’t just buy stock based on the price; you have to consider various factors before investing in any penny stocks, as investing in top penny stocks comes with high risk.

Essential Factors to Consider

  • Research- Conducting thorough research within specific sectors can help the investor identify companies with potential growth in the long run.
  • Evaluate market conditions– The performance of penny stocks in India is affected by dynamic market conditions like GDP growth, changing inflation rates, monetary policies, etc.
  • Company understanding- A penny stock’s potential to become a multi bagger stock in India depends upon the company’s strong fundamentals. Investors must assess the company’s background and focus on factors like financial performance, profit margins, and growth. This way investors can have the potential for long-term wealth and success. 
  • Scam awareness- Be cautious of the companies engaging in scams, as penny stocks are often targets for fraudulent activities.
  • Risk management- understand your risk tolerance, investment horizon, diversification strategy to manage risk effectively. 
  • Avoid unreliable sources-.Always choose a reliable source of information and conduct thorough research before making investment decisions. Avoid tips from websites, news, etc.
  • Monitoring market trends– Regularly monitor the market conditions and industry trends prevailing., this will help you to select the best penny stocks with high growth potential
  • Diversification- It is good to diversify your portfolio by investing in penny stocks as they can be valuable additions to your portfolio; however, just investing in penny stocks is not a good strategy, as they are highly speculative and risky, and aligning your portfolio with just penny stocks can increase your risk of future loss.

List of Top 10 Penny Stocks of 2024

S.no Stocks Name Market Capitalization(in Cr) P/E Ratio 5 Years Returns (%)
1. Teamo Production 119 24.34 762.50
2. Sawaca Business 63 140.15 642.33
3. Shree Ganesh Bio 49 119.49 -79.67
4. Maharastra Corporation 17.3 27.47 195.38
5. Panafic Industrials 10 13.83 215.00
6. Kretto Syscon 12.7 70.95 -8.15
7. Vision Cinemas 11.54 25.87 37.50
8. Khoobsurat Ltd 16.5 63.11 557.89
9. Ontic Finserve 6 NA 36.65

Advantages of investing in penny stocks 

  • Affordability- Penny stocks are cheap to buy. Investors buying stocks of big companies with a market capitalization of around 1-2 lakhs will get only a few 100 shares, but with the same capital, they can buy penny stocks priced at 4-5rs and can get1000 shares 
  • Low entry cost- The entry cost to buy the best penny stock is much lower and affordable, making it a reliable option for all. 
  • High room for growth– Penny stocks trade at a low price, how much more can they fall, right? There is a chance they can grow and become multi baggers if invested wisely. A very good example is Rakesh Jhunjhunwala bought stocks of Titan, which is now the largest jewelry brand. He bought stock in 2002-3 at just Rs4.5;  now the same stock is around Rs 350-400, which gave him an 8000% return. That penny stock became a multibagger in the long run but that doesn’t mean every penny stock becomes multi bagger. You have to come up with a good strategy and invest 
  • Volatile nature- These stocks are highly volatile in nature and you can take advantage of quick moves in the market. An increase of 20-30% can easily happen in a penny stock, which mostly doesn’t happen in other stocks.

Risks involved in investing in penny stocks 

  • Most penny stocks are junk- There are mostly no good companies with penny stocks in the market. Most companies have low market capitalization or are involved in scams and have low financial performance, making finding a good company difficult.
  • Low liquidity and trading volume – Once you buy a penny stock it is very difficult to sell it at a decent price. Bid-ask price will force you to sell at a cheap price, which will eventually be your loss. 
  • Highly volatile- Penny stocks are highly volatile which can be a good thing, but at the same time  it can lead to rapid price fluctuations in the market.
  • Limited data available -Most companies with penny stocks are small and they often don’t comply with SEBI regulations and standards. They don’t disclose their company documents, and even if you have the data it is hard to say if it is reliable. 
  • Scams- Penny stocks are so cheap that they are so vulnerable to scams such as  Pump and Dump scheme
  • pump and dump scheme- Fraudsters promote a stock with false information to artificially inflate its price(pump) and once the price is high they sell the shares for a profit causing the price to crash(dump) leaving the investors with losses that they can never suspect. 

Tips for Penny Stock Investors

So be aware and safe from the risks involved in penny stocks, you can trade wisely by just following some simple tips

  • Do your research 
  • Identify the potential catalysts of the stock that can make the prices fluctuate in the market; like any new product launch or partnerships etc
  • Invest in companies with high market capitalization, as you don’t want to invest in tiny companies risking your money.
  • As a responsible and smart investor, always invest the money that you can afford to lose. This way you can manage your risk.
  • You can select the company with high market capitalization chances are they are more trustworthy and reliable 
  • Beware of the pump-and-dump scheme
  • Be prepared- stock markets are subject to high risk and not all investments can become multibagger, so while investing in penny stocks be prepared for the volatile market and set realistic goals. 
  • Take guidance and help from research analysts to get better insights and subscribe to newsletters, financial advisory apps, etc., to further reduce risk and make a good grip in the market.

And you are ready to go!!

Conclusion

Investing in Top penny stocks can be risky but also rewarding if you are here to play for the long run! It can turn out to be a hidden gem or a risky bet. With a clearly defined goal, thorough research, and a great understanding of the market, you are ready to go far! 

By taking the necessary measures, investors can go a long way in managing the risks associated with penny stocks in India and enjoy substantial returns. A good strategy always comes in handy while investing. The conclusion is to always proceed with caution; with the right approach, penny stocks could be a valuable addition to your investment strategy in 2024! 

Disclaimer: This is for general information and education purposes only. The Securities quoted (if any) are for illustration only and are not recommendatory. Past performance does not guarantee any future returns. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. For more details/disclosures, visit www.univest.in/univest mobile application.

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