Penny stocks carry inherent risks primarily due to the characteristics of the companies that issue them. These companies often have low liquidity, meaning their stocks trade infrequently and at times may not find buyers easily. Consequently, investor interest in these companies tends to be limited, attracting mainly those with a high tolerance for risk.
The appeal of penny stocks lies in their potential for substantial returns within a short timeframe. While some penny stocks can deliver significant gains, others face the risk of complete loss if the underlying company fails to sustain its operations or meet market expectations. This volatility makes penny stocks both potentially lucrative and highly risky investments.
Due to less liquidity, these penny stocks are often managed by manipulators. You will often see these stocks hitting lower/upper circuits frequently without any news. And its easy for management to give forward looking statements without taking into account ground reality to artificially increase the stock price and then encash on it.
#Derivatives#futuresoptions#mutualfundssahihai#nifty#banknifty#manipulation#stockmarket#stockmarketgalathai#stockmarketgandahai#stockmarketghatiyahai