Growing attraction in penny stocks

Ahmedabad. 27 August 2020, Thursday

The smallcap index has also seen a significant rise as the attractiveness of penny stocks has rebounded during the recent uptick in the stock market on the back of local as well as global factors.

According to market insiders, the recent uptick in the stock market has seen an unimaginable rise in such stocks as small investors are turning to penny stocks again.

Companies that have not sold a single rupee during the current period and have plunged into a loss-making situation, have seen their stocks soar by up to 200 per cent on the back of new entrants.

According to available data, shares of Transglobe Food Company have soared by 200 per cent this year. In addition, shares of Shree Prikoted Steel Company have risen by more than 1,200 per cent. Both these companies are mired in losses.

These are just two examples of companies. Shares of many such small companies have risen this year. The rise was mainly due to the active role of small investors, the circles added.

It may be mentioned here that the Sensex has improved by 30 per cent since hitting the bottom in March. However, the smallcap index has risen 3 per cent from its March low, compared to a fall of 7.5 per cent this year. While this year, it has improved by 7.5 percent.

According to market analysts, 4.5 million new demat accounts have been opened since the lockdown. Many small investors have entered the market. And they have become massively active in such penny stocks. Which is a matter of concern.