While the entire share market is identified by the ever-fluctuating bullish and bearish trend, some stocks are considered extremely volatile. These most volatile stocks in NSE or BSE are subject to frequent fluctuations, but their highly volatile nature makes them eligible to provide big returns with significant price movements.
This post explores the 10 most volatile stocks in India.
Understanding Volatility
Volatility refers to a statistical measure that points to the deviation through standard variants or deviation. In the context of the stock market, volatility refers to the movements of a stock’s price from its actual value or the movement according to the comparison with its index. Volatility can occur every minute, and volatile stocks can differ from one trader to another.
The term high volatile stocks for intraday refers to the gap between the lowest and the highest prices in a day. While some traders consider it the highest volume traded, others can take it as complex calculations-oriented mathematical models that work on the basis of historical data.
Identifying the Most Volatile Stocks - Methodology
When it comes to the most volatile stocks, there are numerous factors to consider. One of the most crucial among them is Beta. It is used to measure the volatility of stocks depending on their index. The most vital feature of a high fluctuating share is the high risk-return ratio. Beta, generally, calculates the systematic risk or volatility of a stock that is un-diversifiable. However, with this risk, a higher chance of earning substantial returns also emerges.
The rapidly fluctuating prices create room for earning the best returns on the highly volatile stocks for intraday. When Beta is equivalent to 1, it indicates that it executes in the same way as the benchmark index. When the Beta is greater than 1, the stock is expected to show more fluctuations than the benchmark index.
Likewise, when the Beta is less than 1, the stock is expected to show less fluctuation when compared to its benchmark index. Any subtle change in the index may impact these stocks significantly. Usually, increased stock volatility means you earn above-average returns. This eventually increases the supply and demand of these shares and the volume traded in a day.
Should You Invest in High Volatile Stocks?
Investing in highly volatile stocks may be beneficial. However, it has some downsides as well. The merits and demerits of investing in the most volatile stocks look like the following.
Benefits
As highly volatile stocks tend to be largely fluctuating, you can earn higher profits even if the benchmark index goes a little upwards.
- For highly volatile stocks, fluctuating conditions indicate that they may outperform in situations like inflation. Consequently, investors can hedge against inflation and achieve significant purchasing power.
- Usually, the most volatile stocks belong to small-cap or mid-cap companies. Thus, you may buy them at lower costs.
- Usually, people want to invest in safe and risk-averse stocks. Hence, the demand for highly volatile stocks, in the long run, is lesser than the blue-chip stocks. This allows investors to enjoy significant price benefits.
Downsides
- For highly volatile stocks, investors fully bear the responsibility for unsystematic risk, which includes the state of the economy and stock market conditions. However, there is always room for a value trap. Consequently, despite a steep rise in the benchmark index, highly volatile stocks may fall drastically in terms of value because of business failure, faulty management, and other unforeseen issues.
- The Beta of highly volatile stocks is usually greater than 1. Besides, they are outperforming. Given this, such stocks may lead to a situation when the benchmark index drops by a small percentage, but the stock loses its value significantly.
The Top 10 Most Volatile Stocks in India
Now that you have read about the most volatile stocks, here’s a quick list of the 10 best among them.
KM Sugar Mills
KM Sugar Mills is a manufacturer of sugar and distillery products. In addition, it generates electricity. The company holds a significant production capacity. KM Sugar Mills’ stock price has experienced a fluctuation of 15% of the current market price recently. What’s more, the stock featured three spikes in a day, and the highest % change in upside-down movement was approximately 60%.
Magma Fincorp Ltd
This asset finance company operates in 22 states in India. It offers different financial solutions for financing agricultural products, personal requirements, vehicles, etc. Magma’s stock experienced price volatility of approximately 11% of the base market price.
Sun Pharma
This India-based multinational pharmaceutical agency markets different pharmaceutical formulations and active pharmaceutical ingredients. The company’s 200-day moving crossover shows that it has seen significant volatility recently. The stock usually moves by +/- 3-4% a week. However, according to advocates, Sun Pharma’s stock has been less volatile than 75% of other Indian stocks over the past three months.
3i Infotech Ltd
This multinational brand serves 50 countries across four continents. The company offers IP-based software solutions and different IT services. The company’s price volatility is 14% of the base market price.
Suzlon Energy Limited
This Pune-based wind turbine supplier has been a favourite for Rakesh Jhunjunwala. However, he later discarded the stock because of the company's continuous losses. However, Suzlon is recovering now, and in this recovery stage, it’s experiencing noteworthy price swings of approximately 25% of the base market price.
Jubilant Industries Ltd.
Jubilant Industries deals with performance polymers and agricultural products. Recently, the company has shown price volatility of 13% of the base market with a gain of 37% and then a drop of 50%.
Take Solutions Ltd.
Take Solutions Ltd. is a management consulting company, and its stock trades in big volumes because of market acceptability. However, the stock tends to exhibit price volatility of around 19%. Recently it has experienced a narrow reversal toward a bearish recovery.
Punjab National Bank
This financial institution has been seeing unique rises and falls since FY2020. On March 1st 2023, its share price rose as investors reacted positively to the reports of its withdrawal from the divestment process of Canara HSBC Bank. Moreover, its share price is now up 77.90% from its 52-week low price.
Tata Steel
This steel company in India has shown volatile share activities in recent times. After renowned brokerage Jefferies maintained a ‘Buy’ recommendation for Tata Steel, the company has shown to offer a 30% upside earning potential depending on its share price at the current level. The company, however, has seen noteworthy dips in share price in February 2023.
GVK Power and Infrastructure Ltd.
A vertical of GVK Group, GVK Power and Infrastructure Ltd. handles different pan India power and infrastructure projects. It is said that the performance of the power sector in the current year is responsible for the stock volatility of the company. The company features a significant volume of executed trade because of its proven capacities. The price volatility of the stock is 13% of the base market price.
In Conclusion
To summarise, high volatile stocks come with good earning opportunities. The stocks explored above are ideal examples of the most volatile stocks. Therefore, they are perfect for intraday trades. You may consider investing in these stocks to earn well. However, you need to monitor their activity carefully to prevent loss.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.