Penny Stocks in India 2024 – Benefits, Advantages & Disadvantages

March 27, 2024 Trading 6 min read

Have you also seen news of multi-bagger penny stocks gaining up to 1400%, or your trader friend bragging about his profits on penny stocks?

Well, we understand the FOMO around penny stocks. That’s why we bring you the ultimate guide to choosing the best penny stocks so you can make an informed decision.

What Is a Penny Stock?

Let’s start with the basics and define a penny stock. Penny stocks are affordable, speculative shares from small businesses traded at low prices, usually below ₹10 in India.

They have significant potential for growth, allowing investors to earn substantial profits with minimal investment. Despite initial doubts, some penny stocks have evolved into major success stories, turning small investments into significant gains.

Penny stocks represent a low-cost, high-potential avenue for small investors and are commonly listed on the NSE and BSE. Even giants in the market today began as penny shares with a small market capitalization in India.

Features of Penny Stocks

How would you identify penny stocks? You can identify these stocks by looking at their underlying features as follows:

  1. They are Affordable

With their relatively low prices, penny stocks present an opportunity for high returns on investment. The affordability factor makes them appealing for potential share appreciation.

  1. They Are Not Very Liquid

Now, penny stocks can also pose challenges due to their limited liquidity, making it difficult to sell them quickly, especially in urgent situations. Not everyone is willing to buy penny stocks.

  1. They Can Get High Returns

Penny stocks can be risky due to their unpredictable prices that can change quickly. However, they can also offer higher rewards because of this volatility. It’s important to keep in mind that investing in penny stocks involves a greater chance of losing money, so it’s crucial to be cautious and conduct thorough research before making any investment decisions.

Benefits of Penny Stocks

Buying penny stocks can have many benefits. In this section, we’ll mention a few benefits of penny stocks. 

  1. Penny Stocks Are Inexpensive

Penny stocks are a great option for those who don’t have a lot of money to invest, as they are not expensive. Even a small investment can help you get started in the stock market and diversify your investments across various stocks, allowing you to grow your money.

  1. They Can Generate High Returns

The cool thing about penny stocks is that even a tiny increase in their value can give you a big profit percentage-wise. If you are looking to make good money and don’t mind a bit of risk, penny stocks can be exciting and rewarding. 

  1. These Companies Can Become Big 

Who knows if you’re buying the stock of the next Reliance? Every giant started somewhere. Many penny stocks come from small companies that are just starting to grow. Investing in them early on could mean you get to ride the wave of their success, turning a little bit of money into a lot over time.

  1. Smart Moves Can Generate Profit

Yes, penny stocks can be a bit jumpy, but that’s not always a bad thing. If you’re active and know what you’re doing, you might use the ups and downs to your advantage, making smart moves to profit from quick changes in prices.

Types of Penny Stocks

There are different types of penny stocks. Let us go through each of them to choose the right penny stock wisely: 

  1. Turnaround Stocks 

These companies have a rocky past but a promising comeback potential. These stocks, once underperformers, are anticipated to bounce back, offering a chance for substantial gains as they recover. They might actually turn around…

  1. Speculative Stocks

These are the companies that are facing uncertain future aspects. While riskier, these speculative investments might bring significant rewards if the company manages to overcome challenges and thrive.

  1. Growth Stocks

Companies’ penny stocks are expected to experience rapid expansion. These promising picks hold the potential for significant long-term gains as the companies flourish and grow in the future.

List of Multi-Baggers Penny Stocks

A multi-bagger stock is a stock that has experienced a significant rise in value, resulting in returns many times higher than the initial investment. Here is the list of multi-bagger penny stocks from the past:

Company Name Return (YTD) 
1. Svaraj Trading & Agencies 210%
2. Earum Pharmaceuticals 159%
3. Mid East Portfolio Management 117%
4. Ganga Forging 150%
5. Continental Securities 107%

Source: Mint

Disclaimer: This article is for information purposes only and should not be considered as stock recommendation or advice to buy or sell shares of any company. Investing in the stock market can be risky. It is therefore advisable to research well or consult an investment advisor before investing in shares, derivatives or any other such financial instruments traded on the exchanges. All returns are subject to change as per the market. Please closely monitor the market for accuracy. 

How to Find the Best Penny Stocks to Buy?

Besides these lists, you should be able to find the best penny stocks based on your research. Here are a few steps you should follow to decide which is the best penny stock to buy. 

  1. Assess the Penny Stock

If you’re considering investing in penny stocks, it’s important to be cautious. While they may have low prices and potential for future gains, you should only use funds that you can afford to lose. Before diving in, it’s essential to assess your risk tolerance.

  1. Seek Help if Needed

If you’re interested in penny stocks, it’s important to work with financial experts who specialize in this market. Following their guidance, you can make informed decisions and achieve your financial goals. Remember that penny stocks can be risky, so seeking expert advice is a smart move.

  1. Research the Company

Beware of false information and advertisements. To make informed investment decisions, thoroughly research companies through trusted financial experts.

  1. Analyze the Market Value of the Company

Before investing in penny stocks, it’s important to analyze the company’s current market value by checking its stock price and reviewing its financial statements. This will help determine the company’s true worth. Remember that this evaluation should be done carefully to avoid potential risks.

  1. Align It With Your Goals

Make sure your investment aligns with your goals and knowledge. Be cautious of possible price manipulations in penny stocks, and make sure your investment timeline matches your specific financial objectives.

  1. Monitor Your Investments

Make sure to regularly check and keep an eye on your investments, making sure they match your goals. Periodically evaluate the management and performance of your portfolio so you can make informed changes when necessary.

Things to Remember Before Buying Penny Stocks

Before you start investing in penny stocks, you should remember these things: 

  1. You should only invest as much as you can lose. 
  2. Thoroughly research the company before investing.
  3. Be prepared for long-term holding and understand the volatility.
  4. Monitor trading volume to ensure easy buying and selling.
  5. Diversify your investments to minimize losses.
  6. Consult with a financial advisor before making penny stock investments for informed decisions.


Now that you understand penny stocks and have gained insights into potential multi-baggers, it’s crucial to approach this market with caution. The lists and guides provided offer a starting point, but remember to invest wisely. Assess your risk tolerance, seek professional advice, and conduct thorough research. Keep these considerations in mind to understand penny stocks and invest in them wisely. With TradeSmart, you can open a FREE DEMAT account and start trading in penny stocks now!

Disclaimer: This article is for information purposes only and should not be considered as stock recommendation or advice to buy or sell shares of any company. Investing in the stock market can be risky. It is therefore advisable to research well or consult an investment advisor before investing in shares, derivatives or any other such financial instruments traded on the exchanges.


  1. Why can’t I sell my penny stock? 

It is often asked why penny stocks cannot be sold easily. The reason is that these stocks lack liquidity, which means that there are not enough buyers interested in purchasing them. Unlike other stocks, penny stocks have a low trading volume, so it is difficult to sell them quickly. 

  1. Where can I buy penny stocks?

Penny stocks are traded on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). 

  1. Are penny stocks risky?

Yes, penny stocks are considered risky because they are not liquid (you can’t sell them if no one is ready to buy), and they are highly volatile. They can give you high returns but can also result in losses. 

  1. Are penny stocks successful?

Penny stocks can get you high returns, but they are speculative by nature, so it’s important to be careful. To be successful with penny stocks, investors should do their research, make strategic investments, and consider market conditions.

  1. Which are multi-bagger stocks?

Multibagger stocks are those that have consistently shown significant appreciation and offered investors substantial returns, often many times their initial investment. To spot multi-baggers, conducting thorough research and analyzing a company’s growth potential and financial health is essential. 

  1. What is a 2-bagger stock?

A “2-bagger” stock is an investment that has doubled in value, providing a return of two times the initial investment. The word “bagger” often describes how much an investment has increased in value.


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