Penny stocks refer to shares of publicly traded companies that trade at a very low price, typically below $1 per share (approximately ₹75-80) in the US markets. In India, penny stocks are typically defined as shares that trade at or below ₹10-20 per share.
The Securities and Exchange Board of India (SEBI) does not have a specific definition for penny stocks, but it does regulate the trading of illiquid stocks, which often includes penny stocks.
Some characteristics of penny stocks in India include:
- Low market capitalization (typically below ₹100-500 crores)
- Limited liquidity
- High volatility
- Low trading volume
- Often listed on smaller exchanges or in the lower-tier segments of the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE)
Investing in penny stocks can be attractive to some investors because of the potential for high returns if the company experiences rapid growth or a turnaround. However, it's essential to exercise caution and thoroughly research any company before investing, as the risks of losing money are also high.
In India, some examples of penny stocks can be found in sectors like:
- Small-cap and micro-cap companies
- Companies in financial distress or undergoing restructuring
- New listings or IPOs that have not gained traction
Please keep in mind that investing in penny stocks is a high-risk, high-reward proposition and requires careful evaluation and research
