Penny stocks are shares listed in nse bse that trade from a fraction of a penny to 20-30rs and having a small market cap. They are riskier as compared to large cap stocks, but give handsome profits in the long run. The long term profit given buy a penny stock varies form 10% to more than 200% or even more. Indeed, some penny stocks have gone from 0.50paise to 100rs+, while others have become worthless.
Large number of investors in India and other countries like penny stocks because it does not take a big cash amout to get started, and one can have a share in a good company that is likely to do well in the long run.
In the past penny stocks have had a bad name because of the lack of information of the company.
Nowadays, investors are quickly learning that penny stocks represent all the small companies across NSE and BSE, that are making good profits year on year and growing continuously. Moreover to nowdays investor avail the information about the profit and loss of any small company very easily.
The upside of penny stocks is the ability to turn a small investment into a fortune.
The downside is the risk, volatility of the shares, and the lack of corporate transparency.
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