Investing in the stock market can be an excellent way to grow your wealth over time. However, it can also be a risky endeavour, especially if you are just starting out or have limited funds to invest. One way to mitigate risk while still participating in the market is to invest in stocks priced below Rs. 20. These stocks are often undervalued and have the potential to provide high returns over time. In this blog, we will explore some top picks to consider. Whether you’re a seasoned investor or just starting out, this guide will help you make informed decisions about investing in the Indian stock market.
List of Top 5 Shares Under 20 Rs.
| Name | Sub Sector | Market Cap (Rs. in crore) | 5Yr Avg Return on Equity (%) |
| NCC Blue Water Products Ltd | Packaged Foods & Meats | 4.65 | 20.00 |
| Interactive Financial Services Ltd | Investment Banking & Brokerage | 3.74 | 10.38 |
| Classic Electricals Ltd | Electrical Components & Equipments | 2.30 | 10.29 |
| Hindusthan Udyog Ltd | Industrial Machinery | 2.27 | 15.96 |
| Sagar Soya Products Ltd | Packaged Foods & Meats | 0.36 | 265.52 |
Data as on 18th April 2023 by market capitalisation
Factors To Consider Before Investing In Shares under 20 Rs
Investing in shares under Rs 20 can be a good option for those looking to start investing in the stock market with a limited budget. However, before making any investment, it is important to consider the following factors:
- Company fundamentals: The first thing to consider is the company’s financial health and its fundamentals. Look for companies with a strong balance sheet, good revenue growth, and a positive future outlook. Also, do some research on the management team and their track record.
- Market conditions: It’s important to analyse the market conditions before investing in any stock. Study the current market trends, the company’s competitors, industry trends, and economic conditions. This will help you make an informed decision.
- Risk tolerance: Investing in shares under Rs. 20 can be risky, as these stocks are generally considered to be more volatile. So, it’s important to assess your risk tolerance and investment goals before making any investment.
- Diversification: Diversification is important in any investment portfolio. Invest in a mix of stocks from different sectors and industries to minimise risk and maximise returns.
- Long-term horizon: Investing in stocks under Rs. 20 requires a long-term perspective. The stock price may fluctuate in the short term, but if you have a long-term horizon, the stock has the potential to grow and offer higher returns.
Risks of Investing In Shares Under 20 Rs.
Investing in shares under Rs 20 can be tempting as they offer the potential for high returns at a relatively low price. However, there are several risks to consider before making any investment decisions. Here are some of the key risks to keep in mind:
- Volatility: Stocks priced under Rs 20 can be highly volatile, which means their prices can fluctuate rapidly and unpredictably. This can make it difficult to accurately predict how the stock will perform over time.
- Liquidity: Low-priced stocks may not be as liquid as higher-priced stocks. This means that there may be fewer buyers and sellers for the stock, which can make it more difficult to buy or sell shares quickly.
- Company risk: Many low-priced stocks are issued by small, unproven companies with limited financial histories. These companies may be more susceptible to failure or bankruptcy, which could lead to a total loss of your investment.
- Market risk: Investing in any stock involves market risk, which means that the value of the investment can be affected by broader economic or industry trends that are outside of the company’s control.
Conclusion
It is important to note that the stock market is a highly volatile and unpredictable space. Therefore, investing in stocks requires careful research and analysis, as well as a good understanding of the market dynamics. Additionally, investing in low-priced stocks can be risky, as they are often associated with small or emerging companies with limited track records. Before investing in any stock consider consulting a financial advisor. If you are ready to invest, open a free Demat account with Angel One right away.
FAQs
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations.
What are stocks under Rs. 20?
Stocks under Rs. 20 in India are shares of companies that are currently trading at a price below Rs. 20 per share on the Indian stock market.
Why are some stocks priced under Rs. 20 in India?
There could be various reasons for stocks to be priced under Rs. 20 in India. It could be because the company is relatively new and has not yet gained much popularity in the market, or because the company is facing financial difficulties or has a poor performance record.
Are stocks under Rs. 20 a good investment?
Investing in stocks under Rs. 20 can be risky as they are often associated with high volatility and low liquidity. It is important to do thorough research and analysis before investing in any stock, regardless of its price.
Can stocks under Rs. 20 be multi-baggers?
Stocks under Rs. 20 can potentially be multi-baggers, but it depends on various factors such as the company’s financial performance, growth prospects, and market conditions. It is important to do thorough research and analysis before investing in any stock.
