Penny stocks are those kinds of stocks that their stock price usually less than ₹25 or ₹20 like that yes bank and idea Vodafone. There is no fixed definition of penny stocks.
The stock price of yes bank is around ₹14 and the stock price of Idea Vodafone is around ₹9.
Those kinds of companies are usually small-cap companies which means those companies do not have so much capitalization, If you will try to find some financial reports of those companies that then you will not be able to find these reports instantly and easily.
In 2003 Mr. Rakesh jhunjhunuwala bought shares of Titan(it is the biggest brand of jewellery.) at that time share price of Titan was ₹3 which means Titan was a penny stock, But now the share price of Titan is around ₹1360. But it is not mean that all penny stocks make you rich.
Penny stocks are like a diamond which is in the mine of coal but the condition is that you have to find that diamond in a mine of coal. Titan is a diamond and Mr. Rakesh jhunjhunuwala recognized it.
Although if the share price of a particular company is the least, in this case there is not meaning that the particular company is the worst and it has least market capitalization.
Let's take an example:- the share price of Shree cements is around ₹23,900.
And the share price of Wipro limited is around ₹340.
But market capitalization of Shree cements is ₹86,408cr.
And market capitalization of Wipro limited is ₹197,922cr.
The meaning is that whatever the share price of the company but we can know that how big the company is by its market capitalization.
So this is for today guys and hope you understood that what are penny stocks
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