How to Find Penny Stocks with Strong Fundamentals in India?

By Advisorymandi
15-February-2019 4:27:08 PM

How do you find the penny stocks in India? There are plenty of stocks to choose from and the problem is that the new ones get listed on the stock exchanges every day. As an investor or trader, it is quite obvious that you may feel confused when it comes to finding the penny stocks, which may have the potential to grow and give better returns in the near future.

So, now the question that pops out here is how you can identify the penny stocks? While every trader may have own his/her method of selecting the stocks, there are some of the prominent tips that must be taken into the consideration to find good penny stocks in India:


Examine Trading Volume

If you have made up your mind to invest in penny stocks, then it is important that you must determine the trading volume, which you are planning to undertake. This is because, if you are investing, then in the near future, you plan to sell the penny stocks, then there must be somebody to buy the shares. It is important to remember that the penny stocks have a very low liquidity and hence you must adopt a very cautious approach before investing your hard-earned money.


Determine the Company Fundamentals

Investing the fundamentals of the company is extremely important before you take the decision to invest in the penny stocks. If the financial health of the company is on the higher side, then you can invest in the stocks hassle-free. Carrying out the fundamental analysis of the company must be your topmost priority for finding penny stocks. Furthermore, it also pays a great deal to keep a close eye on the market reputation and future projects of the company.


Examine the Prominent Ratios

It is quite true that taking into the account the financial health or performance of the company is a vital key to find penny stocks in India, but there are also other prominent ratios such as the debt-equity ratio, market capitalization, Return on Equity (ROE), Earnings Per Share (EPS) and so on. The ratios will help you a lot to companies the performance or financial health of the company, in terms of the earnings and growth quite easily.


Look for Penny Stocks on Exchange

The chances of finding penny stocks on the stock exchanges are less because most of the companies fail to meet the listing requirements. However, this does not mean that you cannot find the penny stocks as they can be located on the Over-the-Counter bulletin boards and pink sheets.  However, it must not be forgotten that the penny stocks are subject to the greater risks and manipulation. Hence, a comprehensive amount of the research is a key here to find the penny stocks and invest in them.



Finding penny stocks for the purpose of making an investment is nothing wrong, but it is also important to keep into the consideration that you should not put all your hard-earned money at one go in the penny stocks.  This is because these kinds of the stocks have a very low liquidity, which means that you are putting your capital at the great risk. According to many renowned financial experts, you can plan to have only 15%to 20% of the penny stocks in your investment portfolio. By this way, you will be diversifying your portfolio and balance your risk profile in a very effective manner.

All in all, taking out some time to find penny stocks and investing them can pay great dividends because there have been instances where the penny stocks have provided excellent gains to the investors or traders in days or hours. The decision for the purpose of investing must be taken in a very careful manner after you weigh all the pros and cons of penny stocks associated with it.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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Yogesh Singh
Yogesh Singh
10 months 11 days ago

Penny Stocks are Good as they are cheap in price as compared to other and will give good returns in near future if we research properly