Over 850 penny stocks rose more than 100% in the last 18 months

New Delhi: Some penny stocks or undervalued stocks have delivered huge returns in the last 18 months, with 102 stocks rising over 1000 per cent and 10 stocks rising by over 5000 per cent.

This misconception has now become widespread and IANS has come to great relief as to how the circular trading and pump and dump schemes are being run in a shambles. It is high time that both SEBI and the exchanges start looking at the data and improve their monitoring mechanism.

Equip Social Impact Technologies rose 29385 per cent, Simplex Papers by 14479 per cent, TTI Enterprise by 13335 per cent, HCP Plasticine Bulkpack by 9620 per cent, according to data from BP Wealth. These were among the best performing penny stocks in the last 18 months.

According to data from BP Wealth, among other top gainers in the last 18 months, Digzam Ltd returned 7197 per cent, GRM Overseas returned 6469 per cent, Tata Teleservices 6448 per cent, Cosmo Ferrites 6130 per cent, Banas Finance at 6,130 per cent. 6021 per cent, B&A Packaging 5013 per cent, ARC Finance 4942 per cent, Adinath Textiles 4764 per cent, SEL Manufacturing Company at 4720 per cent, Vari Renewable Technologies at 4227 per cent, Automotive Stamping and Assembly at 3891 per cent, Rohit Ferro-Tech 3867 per cent, Raghuveer Synthetics 3827 per cent, Ashiana Agro Industries at 3757 per cent, Indian Infotech and Software at 3689 per cent and Pan India Corporation at 3569 per cent.

BP Wealth’s Head of Research Swapnil Shah said that investors in penny stocks have made huge returns after the Kovid-induced market crash in March 2020.

Shah said looking at the return data of penny stocks (stock price in the range of Rs 0 to Rs 20 as of July 2020), over 850 stocks listed on the BSE have gained over 100 per cent in the last 18 months. Astonishingly, 102 stocks have gained over 1000 per cent and 10 stocks have gained over 5000 per cent in the same period.

Shah said penny stocks are more risky than larger stocks due to less information and liquidity, but they offer higher growth potential.

During rosy times, penny stocks perform very well. However, when things turn sour, they tend to tank, especially to trap retail shareholders. Thus, one should be careful and invest in penny stocks only after analyzing their fundamentals and knowing their risks, said Shah.

Shah said this is because they trade at low prices, investors believe they can buy a substantial portion of the shares and have the psychological satisfaction of owning them.

Generally speaking, a stock trading in the value of the money can be due to the company’s very small size, business collapse resulting in a steep drop in stocks, or financial problems.

Over the past three years, we have seen a large number of decent sized companies losing more than 90 percent of their market cap due to various reasons, especially high debt, business failure, etc. In most cases, promoters pledge their shares. Bankers against loans, Shah said.

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