The entire stock market witnesses fluctuation due to the bearish and bullish trends. The significance of stock market volatility lies in its ability to both captivate and intimidate investors. However, there are some high volatile stocks that are subjected to fluctuations for the entire period. While some may shy away from its unpredictable nature, others embrace it as an opportunity for high-risk, high-reward investments.
In this blog, we will delve into the realm of high volatile stocks, explore potential risks, and much more. Let’s begin.
What is the Meaning of Volatility in the Stock Market?
In the stock market, volatility refers to the degree of fluctuation or variability in the price of a particular security or market over a specific period. Volatility is an essential concept for investors and traders as it influences their risk appetite, trading strategies, and potential returns.
It is the difference between a stock’s price (also called a mean price) and its original price (also called volatility) that determines whether it is volatile or not. For instance, let’s imagine it as a pendulum. So, the more the pendulum oscillates from its mean position, the more likely it is said to be more volatile.
Volatility is typically calculated using statistical measures such as standard deviation or variance, which analyze historical price movements. A high volatile stock exhibits wide price swings and is more prone to sudden and significant changes, while a low-volatility stock experiences more stable and predictable price movements.
Thus, you can observe the high volatile stocks in Nifty 50 as well.
How to Identify Best Volatile Stocks?
Identifying highly volatile stocks requires a systematic approach that incorporates various measures specifically designed to gauge volatility. One such factor is Beta. It can be used to measure the stock’s volatility in comparison with its index.
Nifty High Beta 50 is an index that tracks the most volatile Indian stocks and compares them with the benchmark index. Therefore, as prices fluctuate fastly, the chances of earning a return on the high volatile stocks for intraday is higher.
Now, you may ask ‘How can we measure Beta?’ Well, that’s quite simple. If the Beta is greater than 1, then it is highly volatile; however, if it is equivalent to 1 then it means the performance is equal to the benchmark index. Additionally, if the Beta is less than 1, it means that the stock will show less fluctuation as compared to its benchmark index.
Hence, when you are looking at the high volatile stocks NSE, Beta is an important indicator to consider.
List of Most Volatile Stocks NSE 2023
Let’s have a look at the high volatile stocks NSE to understand the concept better. Therefore, for better understanding, we have categorized this section into largecap, midcap, and smallcap companies.
|Stock Name||Sub-Sector||Market Cap||Share Price||Volatility||Beta|
|Hindustan Aeronautics Ltd||Aerospace & Defense Equipment||Largecap||₹3,892.15||31.81||1.15|
|Interglobe Aviation Ltd||Airlines||Largecap||₹2,485.9||24.61||0.86|
|United Spirits Ltd||Alcohol Beverages||Largecap||₹1,012.45||24.06||0.76|
|Bajaj Holdings and Investment Ltd||Assets Management||Largecap||₹7,369.65||29.95||1.34|
|Bharat Dynamics Ltd||Aerospace & Defense Equipment||Midcap||₹1,119||39.16||1.08|
|United Breweries Ltd||Alcoholic Beverages||Midcap||₹1,518.75||18.80||0.65|
|Page Industries Ltd||Apparel & Accessories||Midcap||₹39,662.6||24.26||0.92|
|HDFC Asset Management Company||Assets Management||Midcap||₹2,489.75||28.04||1.20|
|Affle (India) Ltd||Advertising||Smallcap||₹1,088||72.28||1.67|
|Brightcom Group Ltd||Advertising||Smallcap||₹18.85||72.28||1.92|
|Data Patterns (India) Ltd||Aerospace & Defense Equipment||Smallcap||₹2,315.4||46.69||-|
|Gujarat Ambuja Exports Ltd||Agro Products||Smallcap||₹259.7||40.22||0.68|
1. Most Volatile Stocks NSE – Large Cap Companies-Overview
- Hindustan Aeronautics Ltd: Operates in the aerospace and defense equipment industry. With a volatility measure of 31.81, this company exhibits a relatively high degree of price fluctuation.
- Interglobe Aviation Ltd: A leading player in the aviation industry, demonstrates volatility of 24.61. With a beta of 0.86, this stock tends to be less volatile compared to the broader market.
- United Spirits Ltd: A prominent player in the alcoholic beverages industry, shows volatility of 24.06. With a beta value of 0.76, the stock’s price movements depict a stable investment option.
2. Most Volatile Stocks NSE – Mid Cap Companies- Overview
- Bharat Dynamics Ltd: With volatility of 39.16 and a beta of 1.08, Bharat Dynamics Ltd showcases relatively high price fluctuations compared to the overall market.
- United Breweries Ltd: United Breweries Ltd exhibits a lower volatility of 18.80 and a beta of 0.65, suggesting relatively less price fluctuation compared to the market. This indicates stability for this high volatile stock.
- Page Industries Ltd: With volatility of 24.26 and a beta of 0.92, this high volatile stocks falls in the moderate section. While it is not as volatile as Bharat Dynamics Ltd, it is also not as stable as United Breweries Ltd.
3. Most Volatile Stocks NSE – Small Cap Companies – Overview
- Affle (India) Ltd: The company exhibits moderate volatility with volatility score of 29.98. Its beta value of 1.67 indicates that the stock tends to be more volatile compared to the overall market.
- Brightcom Group Ltd: A high volatile stock with volatility score of 72.28. The company’s beta value of 1.92 suggests that it is more susceptible to market movements, indicating a higher level of volatility.
- Data Patterns (India) Ltd: The company demonstrates a volatility score of 46.69, indicating a moderate level of volatility.
What are the Factors to Consider Before Investing in High Volatile Stocks?
Investing in these high volatile stocks can potentially offer high returns, but it also comes with increased risk. Therefore, before investing in such stocks, it’s important to carefully consider a few factors. Here are some key factors to take into account:
- Risk Tolerance: Volatile stocks can experience significant price swings, which can be unsettling for some investors.
- Investment Timeframe: High volatile stocks can be suitable for short-term traders looking to take advantage of price fluctuations.
- Fundamental Analysis: Look at financial statements, earnings reports, cash flow, and debt levels. A high volatile stock may indicate a higher level of uncertainty, so it’s crucial to understand the company’s fundamentals.
- Market Conditions: Consider whether the market is experiencing high levels of volatility or if there are any specific events or factors that could impact the stock’s performance.
- Diversification: Consider how the volatile stock fits into your overall investment strategy. Avoid concentrating on a single high volatile stock.
- Risk Management: Determine your entry and exit points, set stop-loss orders to limit potential losses, and establish a risk-reward ratio that aligns with your investment goals.
- Research and analysis: Utilize tools and resources that can assist in analyzing high volatile stock’s historical performance and volatility patterns.
What are the Advantages & Disadvantages of the Most Fluctuating Stocks?
Fluctuating stocks are those whose prices fluctuate more than the overall market. This can be due to a variety of factors, such as the company’s financial performance, news about the company, or broader economic conditions.
There are both advantages and disadvantages to investing in high volatile stocks NSE.
- Potential for High Returns: High volatile stocks can offer the potential for high returns, especially over the long term. This is because they are often priced more cheaply than less volatile stocks.
- Opportunities for Traders: Traders can buy and sell highly fluctuating stocks quickly to profit from small changes in price.
- Access to New Industries: High volatile stocks can give investors access to new industries that are not yet well-established.
- High Risk: High volatile stocks are also more risky than less volatile stocks. This is because their prices can fluctuate more wildly, which can lead to large losses.
- Unpredictability: It can be difficult to predict how volatile stocks will perform in the short term. This can make it difficult to time your trades and to make profits.
- Lack of Liquidity: High volatile stocks may not be as liquid as less volatile stocks. This means that it can be difficult to buy and sell them quickly, which can make it difficult to exit a position if the stock price falls.
Tips For Investors While Investing in High Volatile Stocks
Here are some tips to consider while investing in high volatile stocks:
- One strategy investors employ to deal with high volatile stocks is to stay invested and ignore short-term movements. Implementing this can be harder than it sounds as during a bear market, one’s portfolio can show a loss of 50% or even more.
- Traders also need to avoid the misconception about the buy-and-hold strategy. To make a successful long-term investment, one must understand how corporate fundamentals drive the markets.
While one can find a number of advises on how to deal with stock market volatility, investors need to be aware of certain things. They are:
- High volumes of trading often cause delays in the execution of orders on volatile markets. In such situations, orders of high volatile stocks may be executed at prices different from market quotes.
- Traders may also encounter slight difficulties executing their trades due to system limitations. It is possible to have difficulty accessing one’s account when trading online, so alternative methods, such as calling or faxing your broker, should be considered.
- Investors need to be careful about their orders when the markets are not moving in the direction predicted or not in their usual way. With limited orders, investors can reduce losses caused by incorrect quotes when placing orders.
To Wrap It Up…
To conclude, high volatile stocks or the most fluctuating stocks NSE can be a good investment for investors who are willing to take on high risk in exchange for the potential for high returns. Therefore, it is highly advisable to conduct thorough research and consult a financial advisor before moving ahead.