Things to consider before purchasing shares below 10 rupees

Investing in shares below 10 rupees can be an attractive proposition for many investors, especially those who are new to the stock market. However, it’s important to keep in mind that these shares are considered to be penny stocks and they come with a higher degree of risk. So, before you invest in shares below 10 rupees, it’s crucial to consider a few things.

Firstly, it’s important to understand the company’s financials and its business model. You should take a close look at the company’s revenue, profit, debt, market share, and other financial indicators. A company with strong financials and a sound business model is more likely to perform well in the long term.

Secondly, you should also consider the industry in which the company operates. Some industries are inherently more volatile than others, and investing in shares below 10 rupees in such industries can be risky. For example, the airline industry is known to be volatile, and investing in penny stocks of an airline company can be risky.

Thirdly, you should also look at the liquidity of the shares. Shares below 10 rupees may not have a high trading volume, which means that it may be difficult to sell them when you want to. You should ensure that the shares you invest in have enough trading volume and liquidity to make it easy to sell them when you want to.

Fourthly, it’s important to have a long-term investment horizon when investing in penny stocks. These shares can be highly volatile and can fluctuate rapidly in the short term. However, a long-term investment horizon can help you ride out the ups and downs and reap the benefits of the company’s growth over time.

In conclusion, investing in shares below 10 rupees can be a good way to get started in the stock market. However, it’s important to do your due diligence and consider the company’s financials, industry, liquidity, and your long-term investment horizon before investing in penny stocks.

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