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Select low-value stocks on Dalal Street have delivered a robust return to investors in FY21 on the back of sustained liquidity in the market despite rising Covid-19 cases.
domestic equity indices tumbled on Tuesday, tracking weak cues from other Asian stock markets.
Select low-value stocks on Dalal Street have delivered a robust return to investors in FY21 on the back of sustained liquidity in the market despite rising Covid-19 cases. Data showed that at least five stocks that were under Rs 10 as of March 31, 2020 have surged more than 1,000% till date.
With a gain of 2,096%, Digispice Technologies shares have jumped to Rs 76 as of March 12 this year from Rs 3.46 on March 31 last year. Subex (up 1,136%), CG Power (up 1,104%), RRIL (up 1,047%) and Mcleod Russel India (up 1,005%) are among the other top movers in the list.
Stocks that were trading below Rs 10 as of March 31 last year are considered for the article. These kinds of stocks are usually considered as a penny. Investors should stay away from penny stocks as they are highly risky in nature.
While advising small investors, Vishal Gulechha, Head-Retail Equities, ICICI Securities said, “Retail investors are better off focusing on fundamentally strong companies which are backed by research, for long term wealth creation.”
Kolkata-based investor Soumya Malani said, “Stocks which are under single-digit could be termed as penny stocks. When people run behind little known penny stocks on hopes of getting multibaggers return frightened us. Such irrational stuff generally ends in horrendous results.”
Biofil Chemicals (up 966%), Hexa Tradex (up 963%), Kellton Tech Solutions (up 933%), Palred Technologies (up 928%), Goenka Diamond (up 922%), ARC Finance (up 859%) and Birla Tyres (up 859%) stood among other 30 penny stocks which rallied more than 500% during the same period.
Malani added that one should focus on a good promoter, scalable business model, competitive advantage while investing in stocks.
On the other hand, some of the penny stocks have eroded up to 82% of the wealth in FY21. The list included players like Devhari Exports (down 82.80%), Suncare Traders (down 66%), Meenakshi Enterprises (down 61%) and Vikas Proppant & Granite (down 60%).