Top High Beta Stocks – Meaning, Advantages, Benefits & How to Invest in them?
High beta stocks are a popular investment option among traders who seek higher returns. These stocks are known for their volatility and are perceived as high-risk, high-reward investments.
In this blog, we will explore the meaning of high beta stocks, who can potentially invest in them, benefits, factors to consider before investing, and a list of top high beta shares. Let’s begin with the high beta stock meaning by answering the question ‘what is high beta stocks?’
What are High Beta Stocks?
High Beta stocks meaning are those shares that have a beta coefficient greater than 1, indicating that they are more volatile than the broader market. These stocks tend to experience larger price movements in either direction compared to the market, making them high-risk, high-reward investments. Now that we know the high beta definition of stocks, let’s explore our curated list of the top 10 high volatility or high beta stocks in NSE.
Top 10 High Beta Stocks in NSE
Here is the list of high beta stocks in Nifty50 along with stock beta value, share price and market capitalization.
| Stock Name | Sub-Sector | Market Cap (in Cr) | Share Price |
|---|---|---|---|
| Indusind Bank Ltd | Private Banks | ₹1,25,440 | ₹1,441.7 |
| Bajaj Finserv Ltd | Insurance | ₹2,51,647 | ₹1,582.5 |
| Bajaj Finance Ltd | Consumer Finance | ₹4,48,641 | ₹7,070.7 |
| Tata Motors Ltd | Four Wheelers | ₹2,99,848 | ₹800.45 |
| Hindalco Industries Ltd | Metals - Aluminium | ₹1,24,179 | ₹541.4 |
| Axis Bank Ltd | Private Banks | ₹3,38,508 | ₹1,089.25 |
| Adani Enterprises Ltd | Commodities Trading | ₹3,32,754 | ₹2,896.55 |
| Tata Steel Ltd | Iron & Steel | ₹1,61,095 | ₹130.1 |
| State Bank of India | Public Banks | ₹5,60,733 | ₹605.1 |
| Mahindra and Mahindra Ltd | Four Wheelers | ₹1,93,643 | ₹1,595.2 |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data in the high beta stocks list is from 23rd January, 2024. However, for real-time updates on stock prices and market trends, visit smallcase stocks collection today!
Should You Invest in High Beta Stocks?
Investing in high beta stocks is a decision that requires careful consideration. Beta measures a stock’s volatility in relation to the market, and high beta stocks tend to experience larger price swings. While these stocks can offer higher returns in bullish markets, they also carry increased risk.
High beta stocks are often associated with sectors like technology and biotech, where rapid innovation and market sentiment heavily influence stock prices. Investors seeking potential higher returns must weigh this against the heightened risk of significant losses during market downturns.
It’s essential to align your investment strategy with your risk tolerance and financial goals. Conservative investors may opt for low beta stocks for more stability, while those comfortable with volatility might find high beta stocks appealing. Before deciding, thoroughly research the specific factors influencing a stock’s beta and consider consulting with a financial advisor to ensure your investment choices align with your overall financial plan.
How is Beta Calculated in High Beta Stocks NSE?
Beta value is a measure of a stock’s volatility, and it is calculated by comparing the returns of a stock to the returns of the broader market. The beta of the broader market is defined as 1, and a stock with a beta greater than 1 is considered to be more volatile than the market, while a stock and beta less than 1 is considered to be less volatile than the market.
To calculate the higher beta of a stock, analysts typically use regression analysis to compare the returns of the stock to the returns of a relevant market index, such as the S&P 500. Regression analysis involves calculating the slope of a line that represents the relationship between the stock beta returns and the returns of the market index. The slope of this line is the beta coefficient.
How to Find the Beta of Indian Stocks?
Beta is a measure of a stock’s volatility, and it is calculated by comparing the returns of a stock to the returns of the broader market. The beta of the broader market is defined as 1, and a stock with a beta greater than 1 is considered to be more volatile than the market, while a stock with a beta less than 1 is considered to be less volatile than the market.
To calculate the beta of a list of high volatile stocks, analysts typically use regression analysis to compare the returns of the stock to the returns of a relevant market index, such as the S&P 500 (Stock Market Indices). Regression analysis involves calculating the slope of a line that represents the relationship between the stock’s returns and the returns of the market index. The slope of this line is the beta coefficient.
High Beta Stocks in NSE – Overview
Let’s have a look at the high beta stock in NSE that tops the stocks list 2024.
Indusind Bank Ltd
IndusInd Bank is a prominent Indian financial institution known for its wide range of banking and financial services, serving both retail and corporate customers. This stock is 2.56x as volatile as Nifty, with a market cap of ₹1,07,014 cr, stock is ranked 53. It is one of the top companies with highest beta value stocks in the Indian stock market for 2024.
Bajaj Finserv Ltd
A diversified financial services company in India, offering insurance, lending, and wealth management solutions, known for its customer-centric approach. This stock is 2.22x as volatile as Nifty, with a market cap of ₹2,36,850 cr, stock is ranked 23.
Bajaj Finance Ltd
It is a leading non-banking financial company (NBFC) in India, specializing in consumer and small business lending, with a strong presence in the retail finance sector. This stock is 2.24x as volatile as Nifty It is one it is one of the best high beta stocks means, with a market cap of ₹4,33,456 cr, stock is ranked 10.
Tata Motors Ltd
Tata Motors generated an impressive operating revenue of Rs. 401,785.26 Cr. in the past 12 months, exhibiting a remarkable annual growth rate of 25%. While the pre-tax margin stands at 1%, signaling room for improvement, the return on equity (ROE) is currently at 5%, indicating a fair performance that also has potential for enhancement. It is one of the best high beta stocks India.
Hindalco Industries Ltd
Hindalco Industries generated Rs. 216,168.00 Cr. in operating revenue over the past 12 months. Achieving a commendable annual growth of 14%, the company maintains a pre-tax margin of 6% and a robust return on equity (ROE) at 10%. and is one of the top companies with beta measure high beta stocks for intraday trading.
Axis Bank Ltd
Axis Bank generated an impressive operating revenue of Rs. 123.23 billion in the last 12 months. With a remarkable 23% annual revenue growth, the bank boasts a commendable pre-tax margin of 18%. While the return on equity (ROE) stands at 8%, there is room for improvement in this area.
Adani Enterprises Ltd
Adani Enterprises (NSE) generated an impressive operating revenue of Rs. 105,914.06 Cr. over the past 12 months, exhibiting remarkable annual growth at 96%. However, there is room for improvement in the pre-tax margin, currently standing at 2%, while the fair ROE of 7% also warrants enhancement.
Tata Steel Ltd
Tata Steel earned Rs. 235,216.69 Cr. in the last 12 months. While the annual revenue remained stable, there’s room for improvement. The pre-tax margin stands at 7%, which is satisfactory. The ROE is at 8%, indicating fairness but also an opportunity for enhancement. It is one of the top stocks with high beta value in India 2024.
State Bank of India
The State Bank of India generated an impressive operating revenue of Rs. 540,660.26 Cr. in the last 12 months. Notably, it achieved a remarkable annual revenue growth rate of 16%, coupled with a strong pre-tax margin and a commendable Return on Equity (ROE), both standing at 16%, it is one of top stocks in the list of high beta stocks NSE 2024.
Mahindra and Mahindra Ltd
Mahindra & Mahindra generated a robust operating revenue of Rs. 131,312.94 Cr. in the past 12 months. Notably, the company achieved an impressive annual revenue growth of 34%, maintaining a healthy pre-tax margin of 10% and an exceptional return on equity (ROE) of 18%.
Now, let us find out what is beta in stock market.
What is the Importance of Beta in Stock Valuation?
Beta in finance is an important factor in stock valuation because it helps investors to determine the riskiness of a stock compared to the broader market. A stock’s beta measures and is an indication of how much its price is likely to move in relation to the share market, and this can help investors to assess the potential risks and rewards associated with an investment in that stock, that is the beta meaning in finance.
For example, if a stock has a good beta of 1.5, it is considered to be 50% more volatile than the broader market. This means that if the market moves up by 10%, the stock is likely to move up by 15%, and if the market moves down by 10%, the stock is likely to move down by 15%. On the other hand, if a stock has a beta of 0.5, it is considered to be 50% less volatile than the market, meaning that its price is likely to move up or down by only half as much as the market.
How to Invest in High Beta Stocks NSE?
You can invest in high beta stocks NSE through several avenues. This includes buying individual stocks through a stockbroker, investing in high beta ETFs or mutual funds for diversification, using derivatives like futures and options for more advanced strategies, or setting up systematic investment plans (SIPs) for disciplined investing. However, always research thoroughly and assess your risk tolerance when considering high beta 50 stocks list 2024 investments.
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered experts
- smallcase.com offers over 200+ stock portfolios, created by 180+ managers
- Some of the popular smallcases among new investors are as follows:
Disclosures for aforementioned smallcases
Beta BlockBuster smallcase
If you’re looking for a smart way to invest in the Indian stock market, you can check out ‘Beta BlockBuster.’ It’s a smallcase filled with high-quality beta stocks. These stocks have the potential to deliver attractive returns, and they’re known for their stability. However, investors must consider the investment goals and risk appetites before investing in High beta stocks.
Disclosures for Beta BlockBuster smallcase
Who Should Invest in High Beta Stocks?
Investing in high-beta shares can be suitable for investors who are willing to take on higher risks in exchange for potentially higher returns. Such investors may have a higher risk tolerance and a longer investment horizon, and they may be comfortable with the volatility that comes with investing in high-beta shares.
Moreover, investors who are interested in investing in growth industries may also consider high beta shares, as these stocks often provide exposure to sectors that are expected to experience strong growth in the future.
However, it is important to note that investing in these stocks comes with higher risks. Market conditions, such as interest rates, inflation, and geopolitical events, can have a significant impact on high beta shares. Hence, it is important to evaluate the trends in the industry, the financial performance of the company, and risk tolerance before investing in these stocks.
Factors to Consider When Investing in High Beta Shares
Investing in high beta stocks in Nifty 50 can be a lucrative strategy. However, it’s important to consider several factors before investing in these Nifty 50 high beta value stocks. Here are five key factors to consider:
Industry Trends
One of the most important factors to consider before investing in high beta shares is industry trends. Investors should conduct thorough research to understand the current and future outlook for the industry in which the company operates. Investing in high beta f&o stocks in an industry that is expected to grow rapidly in the future may provide better returns.
Company Performance
The performance of the company itself is also a critical factor to consider. Investors should evaluate the financial statements (such as balance sheets), revenue growth, profit margins, and other relevant metrics to determine whether the company is a good investment opportunity. Companies with strong fundamentals and positive earnings growth may be more attractive investment opportunities.
Market Conditions
Market conditions can have a significant impact on these stocks. Factors such as interest rates, inflation, and geopolitical events can affect the overall market, which in turn can impact the performance of these stocks. Therefore, it’s important to consider market conditions and how they may affect the performance of high beta shares before making an investment.
Risk Tolerance
Investing in high-beta stocks requires a higher risk tolerance than investing in low beta stocks. These stocks are more volatile and can experience significant price fluctuations in a short period of time. Therefore, investors should consider their risk tolerance before investing in these stocks.
Valuation
Finally, investors should consider the valuation of these stocks before investing. These best beta stocks may be overvalued or undervalued, and investors should evaluate the stock’s price-to-earnings beta ratio (P/E ratio), price-to-book ratio (P/B ratio), and other relevant metrics to determine whether the stock is a good investment opportunity.
Features of the Top High Beta Stocks NSE
High Beta Stocks on the NSE exhibit distinctive characteristics that set them apart in the market. Understanding these features is crucial for investors seeking comprehensive insights.
- Volatility Amplification: High Beta Stocks tend to amplify market movements, showcasing greater price fluctuations compared to the overall market index. This heightened volatility can present both risks and opportunities for investors.
- Market Sensitivity: These stocks are highly sensitive to market trends and sentiments. As the market fluctuates, these stocks often demonstrate a magnified response, making them more reactive to economic shifts and global events.
- Aggressive Growth Potential: The elevated volatility associated with these stocks is often linked to their potential for aggressive growth. Investors in search of high-risk, high-reward opportunities may find these stocks appealing.
- Sector-Specific Trends: Certain sectors consistently host these stocks. Identifying these trends can provide a more nuanced understanding of the factors influencing the beta means values of stocks within specific industries.
- Risk Considerations: It’s crucial to note that while these stocks offer potential for increased returns, they also come with heightened risk. Investors should carefully assess their risk tolerance and investment objectives before considering these stocks.
Risks of Investing in High Beta Stocks
Though the beta of a stock signifies the volatility and risk associated with it, relying solely on it would not be a wise move. Here’s why.
Are relatively riskier
Stocks with a beta in stock market value of more than 1 are riskier as they are sensitive to market volatility. Ergo, a downturn in the stock market can impact such stocks leading to huge losses.
Have other associated risks
The market beta of stock coefficient is the rate at which the price of a stock moves when compared to the broader market index. While this is an important indicator of the volatility with respect to the stock, there can be other associated risks as well. Ergo, if you simply rely on the beta value of a stock to invest in it, you may be ignoring other red flags, such as inefficient management or operations.
Reliance on past data
What is beta coefficient is calculated based on past data of stock. So it is a good indicator of the stock’s past performance but doesn’t guarantee future performance.
Benefits of Investing in High Beta Stocks
Investing in high beta stocks in Nifty 50 can offer several benefits, including:
- Higher Returns: High beta shares often provide the potential for higher returns than the overall market. It is because they are more volatile and can experience significant price fluctuations in a short period of time.
- Diversification: High beta stocks can help diversify a portfolio, as they often come from different industries and sectors than low or negative beta stocks. By investing in high beta stocks, investors can reduce the overall risk of your portfolio by spreading investments across different types of stocks.
- Exposure to Growth Industries: High beta shares are often found in growth industries such as IT, healthcare, and biotech. Investing in these industries can provide exposure to innovative companies that are expected to experience strong growth in the future.
- Potential for Capital Appreciation: High beta shares can offer potential for capital appreciation, as they have the potential to increase in value rapidly.
As always, investors are advised to do their own research or consult their financial advisors before investing in high beta stocks.
What are High Alpha and Low Beta Stocks?
High alpha low beta stocks refer to stocks that exhibit high returns relative to their risk, as measured by their beta coefficient. These stocks are generally considered to be less volatile than the broader market, as their beta coefficient is below 1, as opposed to low beta high alpha stocks. However, they also offer higher returns than the market, as measured by their alpha coefficient.
To Wrap It Up…
High beta stocks offer the potential for higher returns but come with higher risks. Therefore, carefully evaluate your investment goals and risk tolerance before investing. Consider the factors that we have mentioned in this blog to make informed investment decisions.
Moreover, you can invest in high-beta stocks via modern instrument products like smallcase. It offers a platform to invest in a range of high-beta stocks in a diversified portfolio.
So, what are you waiting for? Begin your investment journey today by downloading the smallcase mobile app.
FAQs
According to recent updates, the best high beta stocks in India to invest in include Indusind Bank Ltd, Bajaj finserv Ltd, & Bajaj Finance Ltd.
Note: This stocks list 2024 for educational purpose only and not recommendatory.
You can invest in the best high beta stocks in Nifty in India by:
1. Do your research
2. Diversify your portfolio. Don’t put all your eggs in one basket.
3. Invest for the long term. These can be volatile in the short term, but they tend to do well over the long term.
4. Monitor your investments
Yes, high beta stocks can be good for intraday trading. These stocks, being more volatile than low beta index counterparts, exhibit greater price fluctuations over short time frames, making them suitable for intraday trading. However, investors must do their own research and/or consult their financial advisor before investing.
The ideal beta for a stock depends on your investment objectives and risk tolerance. Generally, a beta of 1 indicates the stock moves in line with the overall market. A beta greater than 1 suggests higher volatility.
Yes, high beta stocks for intraday NSE can be profitable for investors. These stocks are more volatile than low beta stocks, which means that their prices tend to move up and down more than the prices of low beta stocks. At the same time investors should always consider the market risks before investing.
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