The stock market is inherently subject to fluctuations influenced by bearish and bullish trends. While volatility can intimidate some investors, it also presents opportunities for those willing to take on higher risks for potentially greater rewards. Highly volatile stocks experience significant price swings over a short period, making them a focal point for traders seeking quick gains.
Stock volatility is a measure of how much a stock’s price deviates from its average over time. Higher volatility indicates greater price instability, which can signal increased risk. However, this very characteristic can also help investors predict potential future price movements, offering a chance to capitalise on market trends. For those with a high-risk tolerance, volatile stocks can become an essential part of a dynamic investment strategy.
This article will list the most volatile stocks in 2024 and the factors you should consider before investing in volatile stocks.
List of Most Volatile Stocks
Name |
Marketcap |
2,62,292.90 |
|
89,345.36 |
|
2,464.00 |
|
22,900.85 |
|
2,88,141.00 |
|
12,049.47 |
|
7,654.16 |
|
15,936.02 |
|
49,036.50 |
|
40,045.73 |
|
97,151.52 |
|
97,817.63 |
|
17,721.00 |
|
6,461.66 |
|
61957 |
|
BEML Ltd |
17836 |
Paytm |
76,283.90 |
Bharat Petroleum Corporation Limited (BPCL) |
64,451.95 |
Zee Entertainment Enterprises Ltd |
12,748.97 |
Disclaimer: Please note that the market cap and other data (above mentioned) are updated as of 4th December 2024. Research thoroughly before investing, considering factors like market cap, debt-to-equity ratio, and past performance to make informed decisions
Overview of volatile stocks in India 2024
Here is a detailed overview of the volatile stocks mentioned above:
- Tata Motors: Tata Motors is an automobile company whose stock experiences high volatility because of its exposure to international markets. Its recent entry into the electric vehicle segment is also a contributing factor.
- Paytm: The stock has seen tremendous volatility after the Reserve Bank of India placed numerous restrictions on its operations. Another reason is the nature of business, which extends to numerous industries.
- Bharat Petroleum Corporation Limited (BPCL): The volatility in the petroleum sector, which is highly affected by global prices, makes the BPCL stock volatile. Another reason is the deduction of VAT by the government.
- Suzlon Energy Limited: The rapid technological advancement in the green energy sector has increased competitors, making Suzlon’s stock volatile. Furthermore, it has also become volatile because of the government’s green energy subsidies.
- Jyoti Structures: The company’s recent change in structure and unprecedented financial performance have made the stock volatile. It is also erratic because consolidation has slowed growth in the transmission line industry.
- Jupiter Wagons Limited: The company’s high dependence on the Indian Railways has made the stock volatile. Another contributing factor is the recent addition of the Vande Bharat segment to the Indian Railway’s fleet.
- Jet Airways Limited: Jet Airways recently saw an ownership transfer, making its stock volatile. The stock is witnessing high demand because of the possibility of its return to the aviation sector.
- Adani Enterprises Limited: The diverse business structure in energy, green energy, oil, electricity, gas, mining, etc., has contributed to the stock's volatility. Recent problems with the Hindenburg report are also a reason for volatility.
- Raymond: The rapid growth in its business and the stock price have contributed to high demand, making its stock volatile. Some personal negative news about Raymond’s founder has also made the stock volatile.
- Nazara Technologies: The volatile nature of the stock has resulted from high government interference, leaving a higher GST rate on the digital gaming segment. Another reason is its risky investments in other startups.
- IFCI Ltd: Industrial Finance Corporation of India (IFCI) exhibits volatility due to its reliance on government policies and the cyclical nature of the financial services sector. Fluctuations in interest rates and economic growth directly impact the stock's performance.
- Housing and Urban Development Corporation Ltd (HUDCO): HUDCO’s stock is subject to volatility as it operates in a sector highly influenced by government infrastructure policies, interest rate changes, and urban development projects.
- Vodafone Idea Ltd: Vodafone Idea remains highly volatile due to its financial instability and competition in the telecom sector. Regulatory changes, spectrum auctions, and operational restructuring also contribute to price swings.
- Rail Vikas Nigam Ltd: Rail Vikas Nigam's dependence on government railway projects causes its stock to be volatile. Delays in project execution, budget allocations, and policy changes influence its performance.
- Mazagon Dock Shipbuilders Ltd: Operating in the defence and shipbuilding sector, Mazagon Dock’s stock sees fluctuations due to the high dependency on government contracts and global geopolitical dynamics. Fluctuating raw material costs also add to its volatility.
- NBCC (India) Ltd: NBCC is affected by its involvement in government infrastructure and construction projects. Delays in projects and fluctuating real estate market trends contribute to its stock's volatility.
- Inox Wind Ltd: Inox Wind’s exposure to the renewable energy sector, coupled with competition and dependency on government subsidies for wind energy, causes its stock to experience substantial price volatility.
- BSE Ltd: The Bombay Stock Exchange (BSE) itself is highly volatile due to its dependency on overall market activity and investor sentiment. Changes in market trends and the introduction of new financial instruments can cause rapid price movements.
- BEML Ltd: Bharat Earth Movers Limited (BEML) faces volatility due to its involvement in defence, railways, and construction equipment sectors. Its stock is impacted by fluctuations in government orders and changes in the capital goods industry.
- Paytm: Paytm's stock remains highly volatile due to regulatory scrutiny, particularly restrictions imposed by the Reserve Bank of India, and the nature of its diverse business operations spanning multiple sectors.
- Bharat Petroleum Corporation Limited (BPCL): BPCL’s stock is influenced by global crude oil price volatility and government policy decisions such as VAT reductions and changes in fuel subsidies.
- Zee Entertainment Enterprises Ltd: Zee Entertainment experiences volatility due to the competitive media and entertainment sector, along with corporate governance concerns and changes in audience preferences. Mergers or strategic collaborations can also impact its stock.
Features of the most volatile stocks to invest in India
Understanding the characteristics of highly volatile stocks can help investors assess opportunities and risks effectively, particularly in the context of intraday trading. Here are some notable features of these stocks:
1. Frequent and substantial price swings
Highly volatile stocks often experience significant price fluctuations over short periods. For example, ITI Ltd and Mazagon Dock Shipbuilders Ltd have recently exhibited sharp intraday price movements. These swings are typically influenced by factors such as market sentiment, external news, or sector-specific developments.
2. High beta values
Volatile stocks generally have a beta value exceeding 1, indicating they are more sensitive to market movements. For instance, Inox Wind Ltd and HUDCO have beta values of 1.86 and 1.70, respectively. High beta stocks react strongly to broader market trends, making them attractive for traders implementing intraday strategies.
3. Smaller market capitalisation
Small-cap stocks tend to be more volatile due to lower liquidity and trading volumes. For example, ITI Ltd is a smaller-cap stock that exhibits pronounced price changes, often driven by shifts in demand or trading activity. These stocks are particularly susceptible to rapid price fluctuations.
4. Sensitivity to news and external events
Volatile stocks are highly reactive to news or external events. Zee Entertainment Enterprises Ltd, for instance, has experienced sharp price swings due to regulatory scrutiny and external pressures. This news-driven volatility makes these stocks a focal point for day traders.
5. Increased trading volume
A rise in trading volume is often associated with higher volatility. Stocks like ITI Ltd, Zee Entertainment, and Inox Wind Ltd have seen significant trading activity, contributing to their frequent price movements. Active buying and selling amplify price volatility, offering opportunities for intraday trading.
6. Irregular or unpredictable earnings
Companies with erratic earnings often face volatile stock prices. For example, Vodafone Idea Ltd and Mazagon Dock Shipbuilders Ltd have reported fluctuating financial results, which have made their stock prices unpredictable and volatile.
7. Historical volatility
Stocks with a history of significant price swings tend to remain volatile. Examining historical data can help identify such stocks. For instance, ITI Ltd has demonstrated consistent historical volatility, making it a regular feature among the most volatile stocks for intraday trading.
Read more: Fortified share
Things to understand before investing in volatile stocks
Now that you know the most volatile stocks, you can analyse these volatile stocks for day trading or delivery. However, investing in volatile stocks is highly risky and requires you to understand some basic factors. Here are the things you must understand before you invest in volatile stocks:
- Risk tolerance: Risk tolerance refers to your ability and comfort level with investing in risky stocks. It means that even if your investment incurs a loss, it won’t create any financial burden on you. Before investing in volatile stocks, analyse your financial situation and determine how much risk you can take. You can compare volatile stocks based on risk levels and invest in suitable ones.
- Investment goals: Although most volatile stocks have a higher potential to offer returns, it is important to choose based on your investment goals. Determine what you aim to achieve with your investments. Are you looking for quick profits or want to build wealth over a long period? Volatile stocks align better with short-term investment goals but can also prove ideal for long-term investing if you can handle the interim fluctuations.
- Market conditions: The stock market follows a general trend or direction that directly affects overall stock prices. A bearish trend results in a general fall in stock prices, while a bullish trend results in a general rise in stock prices. It is important that you analyse the market and identify the current market trend. Most volatile stocks follow the general market trend and can allow you to earn returns in the short term.
- Diversification: Diversification means that you invest your capital amount in various asset classes and include investment instruments to spread the potential risk. When choosing volatile stocks within the stock portion of your portfolio, invest in stocks related to a mix of sectors and industries. If one stock incurs a loss, the profits of other volatile stocks may help offset the loss.
- Technical and fundamental analysis: Technical analysis involves studying past market data, primarily price and volume, to forecast future price movements. On the other hand, fundamental analysis studies the company's financial reports to understand its financial health and performance. When investing in volatile stocks, it is crucial to analyse the stock based on its technical and fundamental factors to ensure it won’t result in a loss.
Advantages of investing in highly volatile stocks
- High return potential: Significant price movements provide opportunities for substantial profits, especially for those who time their trades effectively.
- Short-term gains: Active traders, particularly intraday traders, benefit from frequent price swings, enabling short-term wealth generation.
- Lower entry costs: Many volatile stocks, especially from mid-cap and small-cap companies, are priced affordably, allowing investors to enter the market at a lower cost.
Disadvantages of investing in highly volatile stocks
- High risk: While volatile stocks can offer substantial profits, they also pose a significant risk of loss. Even top volatile stocks may experience severe price declines, outpacing broader market downturns.
- Unpredictability: The erratic price movements of these stocks make them difficult to predict, increasing investment risk. External factors beyond the company’s control often amplify this unpredictability.
- Management issues: Poor corporate decisions or missed targets can lead to dramatic value declines, regardless of broader market conditions. This makes volatile stocks particularly sensitive to internal challenges.
- Emotional stress: Rapid and significant price changes can cause emotional stress, potentially leading to impulsive decisions. Maintaining a long-term strategy can be challenging in such a volatile environment.
Investors must weigh these advantages and disadvantages carefully to determine if highly volatile stocks align with their investment goals and risk tolerance.
Conclusion
Investing in volatile stocks is an important aspect of trading psychology as it defines an investor’s mindset to take on more risk to gain better returns. As the stock market is dynamic (changes in real time), the volatility level for stocks also changes, making it important to understand how to invest in volatile stocks based on certain personal and market-related factors. Now that you know the most volatile stocks and factors to understand before investing in them, you can make better investment decisions.
