Penny Stocks In India Below INR 1 (2024)

It is not everyday that you plan on investing your efforts and money in stocks that are below INR 1. It is rather a unique choice to make and at all times, requires thorough understanding of what an investment in a stock whose price hovers around the value of INR 1 has to offer.

Penny stocks that trade in the range of INR 1 are also known as ultra penny stocks. These are highly illiquid stocks of companies that could potentially be at the brink of insolvency and have no guarantee of continuing operations. Then why invest?

The answer is simple—the paltry low cost of around INR 1 allows an investor to park their funds in a stock that could help them make substantial returns if the stock turns into a multibagger stock. Multibaggers are stocks whose fortune suddenly turns and makes their investor rich multiple times of their investment.

The price of penny stocks in the price range of INR 1 can even turn to zero and there is no guarantee your investment will clock profits and give you returns. Still, the thrill of being able to make remarkable returns lures investors with a high risk appetite to penny stocks and even those in the range of INR 1.

Top 10 Penny Stocks Below INR 1

Benefits of Investing in Penny Stocks Under INR 1

Investing in penny stocks under INR 1 can have both potential benefits and risks. Here are some potential benefits of investing in such stocks:

Low Entry Cost: Penny stocks are typically very affordable, making them accessible to investors with limited capital. With INR 1 stocks, you can diversify your portfolio without a significant upfront investment.

High Growth Potential: Some penny stocks can experience rapid price increases, offering the potential for substantial gains. These stocks are often associated with smaller companies that may have room for significant growth.

Opportunity for Bargain Buys: Investors who can identify fundamentally sound penny stocks trading at low prices may find opportunities to buy undervalued assets. This can potentially lead to substantial returns if the stock price rises.

Diversification: Investing in penny stocks can help diversify your investment portfolio, reducing overall risk. By spreading your investments across various sectors and stocks, you may mitigate the impact of poor performance in any single asset.

Learning Experience: For novice investors, penny stocks can provide a valuable learning experience. Monitoring and analyzing these stocks can help individuals develop their investment skills and gain a better understanding of the stock market.

Factors to Check Before Investing in Penny Stocks Below INR 1

Before investing in penny stocks, basic hygiene to evaluate if your investment is worth making needs to be done. When choosing a penny stock below INR 1, remember to check these important aspects:

Fundamentals: You must ensure to verify the company isn’t reporting losses periodically and showcases spurts of growth. While this may be a tough ask as such companies don’t make significant information on their operations public but it is pertinent to check the fundamentals of the company before blindly parking your money.

Market Rumors: Stocks with a price band below INR 1 are often illiquid and are highly dubious, they are thus subject to steep market manipulations. Before investing, verify the source of the information you’ve received on the stock. It is best to check with your financial advisor and if you are a beginner, investing under the guidance of your advisor is the only way to hedge losing your money.

Timings: Penny stock price movements are erratic and because of being illiquid can be hard to sell at a given point of time. Your best bet is to enter the stock cycle as soon as you identify growth potential and exit if you see the low performing lower-than-normal for a prolonged period of time.

Standing strong on your investment is a strategy that works for mutual funds and direct stock investments in companies with robust fundamentals and solid future prospects. In the case of penny stocks, companies can’t be trusted to continue performing and sticking to your investment for small gains can be harmful.

How to Invest in Best Penny Stocks Under INR 1

Investing in penny stocks in India follows a similar procedure to investing in regular stocks but with a heightened focus on research and risk management due to the inherent volatility of penny stocks. Here’s a step-by-step guide to investing in penny stocks in India:

Educate Yourself: Start by gaining a solid understanding of the stock market, trading strategies, and the specific risks associated with penny stocks. There are various online resources, books, and courses that can help you build your knowledge.

Open a Demat and Trading Account: You’ll need a Demat (Dematerialized) and a trading account with a registered stockbroker in India. Ensure the brokerage you choose allows trading in penny stocks.

Complete KYC: Fulfill the Know Your Customer (KYC) requirements by providing your identity and address proof, PAN card details, and other documents as required by your chosen brokerage.

Put Money in Your Trading Account: Deposit funds into your trading account to have the capital ready for investment.

Choose a Broker: Select a reputable and SEBI (Securities and Exchange Board of India) registered broker. Ensure they have a good track record and offer an easy-to-use trading platform.

Research Penny Stocks: Conduct thorough research on potential penny stocks. Look for companies with promising fundamentals, a solid business model, and growth potential. Analyze financial statements, quarterly reports, and news related to these stocks.

Set Investment Goals: Clearly define your investment objectives, including your risk tolerance, expected returns, and investment horizon.

Diversify: Avoid putting all your funds into a single penny stock. Diversify your investments across different stocks and sectors to spread risk.

Place Orders: Use the trading platform provided by your broker to place buy or sell orders for the penny stocks you choose. Be cautious and use limit orders to specify the maximum price you are willing to pay or the minimum price you are willing to accept.

Monitor Your Investments: Keep a close eye on your penny stock investments. Stock prices can be highly volatile, so stay informed about market developments, company news, and changes in your portfolio.

Should You Invest in Penny Stocks Below INR 1?

Investing in a particular asset class depends upon your financial goals and risk tolerance. In the case of the best penny stocks, one has to know the risks and rewards that such investments offer.

Risks

The most significant risk of investing in penny stocks below INR 1 is your investment losing its value. All stocks that have a stock price in the range below INR 1 are of companies that have very low growth prospects and are solely dependent on sector specific upwings to alleviate them.

Rewards

For an investor to consider investing in such stocks stems from the expectation that their investment will multiply even if the stock rises a few notches higher than its face value. This phenomena when it meets high volumes results in exceptional gains and is often the case of probabilities.