Most Volatile Stocks In India: Volatility refers to a statistical measure of the dispersion of returns for any given security or market index. More often than not, the higher the volatility, the riskier it is to buy the security.
In the share market, volatility is associated with big swings in either direction. Simply put, volatility refers to how much an asset’s price swings around its mean price.
There are numerous ways of measuring volatility, including beta coefficients, option pricing models, and standard deviations of returns. A higher volatility means the value of the stock can be spread out over a large range of values.
Therefore, the stock price can change significantly over a short period of time in either direction. A lower volatility means that the stock price does not dramatically fluctuate, and tends to be more stable.
Simply put, if the stock price fluctuates rapidly in a short span, hitting fresh highs and lows, it is believed that the stock has higher volatility. On the contrary, if the stock price moves higher or lower more slowly, it is believed that the stock has lower volatility.
There are several factors that can result in higher volatility. New entrants in the stock market are advised to place trades on stocks that are relatively more stable.
In this article, we will cover the most volatile stocks in India in the recent past. The focus will also be on the factors which can result in higher volatility.
Stock Volatility – What Can Be The Reasons?
Before discussing the most volatile stocks, it is important to understand the reasons behind this volatility. There can be several reasons which can result in higher volatility and traders and investors are required to monitor the factors responsible.
By doing so, losses can be reduced and returns can be stabilized.
1. Political And Economic Factors
Governments tend to play a critical role in regulating industries,s and government bodies can impact an economy while making decisions on trade agreements, legislation, and policy.
Speeches in the elections and other news about recent initiatives can cause reactions from investors. Therefore, stock prices tend to fluctuate easily.
Economic data also has an important role to play as when the economy is doing well, investors react positively. Data points including monthly jobs reports, inflation data, GDP data, etc. can all impact performance of the market.
Therefore, if these measures miss the estimates and fall short, markets may become more volatile.
2. Industry And Sector Factors
Certain events related to the sector can cause volatility within the stock of that particular industry or sector. For example, oil stocks can become volatile and unpredictable if a major weather event occurs in an important oil-producing area.
Similarly, higher consumer spending figures point to higher consumer confidence which can help consumer-focused companies. Therefore, stocks operating in such industries can rise dramatically and deliver strong returns.
On the other hand, increased government regulations can impact stock prices as a result of increased compliance and employee costs which can impact growth in earnings.
3. Company Performance
Apart from these market-related factors, volatility can be related to an individual company too.
Positive news, like a strong earnings report or a new product, can impact the stock price of that particular company as investors can become more confident about the future of that company.
If several investors plan to buy the stock, higher demand will eventually raise the stock price. In contrast, if the company decides to recall a product, or it has allegations about a data breach, its stock price can see a free fall.
This is because investors become more cautious about the company’s future and they prefer to sell their holdings. Thus, lower demand can eventually bring down the value of the security.
Depending on how big a company is, positive or negative performance can impact the stock market.
4. Being Opportunistic
Sometimes volatility can also help an investor make solid returns as it can offer entry points to the investors from which they can benefit.
Volatility provides an opportunity for investors to buy additional stocks at better prices which can help optimize returns in the long run. For example.
An investor gets an opportunity to buy a stock for only Rs. 100 that was trading at Rs. 170 earlier. Therefore, when a new purchase is made at Rs. 100, the returns tend to improve when the markets improve in the long run.
This process is the same when the market rises quickly. Individuals can take advantage by selling the stocks at higher prices and they can invest the cash in other areas offering better opportunities.
Making investments when markets are volatile and when valuations seem attractive can help investors book solid returns. Some of the most volatile stocks have delivered strong returns in the recent past.
Therefore, it is of utmost importance to actively track the investments made in such stocks.
Finding The Most Volatile Stocks
One of the easiest ways to find highly volatile stocks is to consider the ones having high beta. Beta measures the expected move in a stock relative to movements in the index.
If the stock has a beta value of greater than 1.0, it points out that the stock is more volatile in comparison to the market. However, a beta value of less than 1.0 indicates lesser volatility in comparison to the index.
There are several data providers which can provide filtering tools. By applying the relevant filter, a trader or an investor can filter out the stocks which have higher beta value.
Apart from this, choosing an index that has high beta stocks can also help. Therefore, investors or traders can filter out the stocks which are present in the small-cap index. Most of the stocks in this index will have a high beta.
Most Volatile Stocks In India
Following are some of the stocks which have seen significant volatility in the recent past.
1. Suzlon Energy Ltd.
The company is a wind turbine supplier which is based in Pune. This stock has been ranked 1 in the list of the most volatile stocks in India. This is because it has seen drastic movements in its share price.
In 6 months, the stock has lost around ~21.27%. On May 26, it fell 9% due to its weak quarterly earnings. On Sept 22, the stock increased by more than 12% on the news about its rights issue. Such huge movements are what make this stock a volatile one.
2. 3i Infotech Ltd
3i Infotech Ltd is an Indian IT company that was incorporated in 1993. IP-based software solutions and IT services have supported the company in organizing customers’ business operations.
However, the stock price has been quite volatile. In the past 6 months, it has fallen by ~29.6%, while on a YTD basis, it has declined by ~54.9%. The stock has seen some strong movement intraday.
On Mar 7, it was locked in the upper circuit because of the new contract announcement. Later, on Sept 9, 2022, it zoomed up by more than ~11% after unveiling Malaysia’s first-ever Zero Trust Sovereign Cloud.
3. Ajanta Soya Ltd
The company manufactures Vanaspati and various kinds of cooking oil with applications products for bakery items including biscuits, puffs, etc.
This stock has shown significant volatility in the past couple of quarters. In 6 months, the stock lost around ~16.6%. However, in 1 year, it has risen by ~55.6%.
4. KM Sugar Mills Ltd
The company manufactures sugar, and distillery products and generates electricity. Its unit is situated in Faizabad (U.P.). The stock has shown some drastic movements.
In 6 months, it has eroded ~31.7% of the investor’s wealth. However, between Mar 31, 2022- Apr 7, 2022, the stock moved from INR29.25 to INR40.15.
5. Jubilant Industries Ltd
This is the flagship company of the Agri and Performance polymers business of Jubilant Bhartia group. In the recent past, the stock has been quite volatile.
The stock has seen a drop of ~30.66% on a year-to-date basis. However, between Apr 16, 2021- Dec 31, 2021, the stock increased from INR198.90 to INR758.05.
6. Tinna Rubber and Infrastructure Ltd
This stock has also been categorized as one of the most volatile stocks. It is a fully integrated company that converts waste tyres into downstream value-added products.
In the past month, the stock has seen a drop of ~13.24%, while in just 6 months, it has risen by ~53.80%.
Also Read: What Is A Low Float Stock? – Low Free Float!
To Sum Up
These are just the handful of stocks that have seen huge volatility recently. There are several other stocks that can be included in the list of “Most volatile stocks In India” In the end, individuals should be aware that investments made in such stocks can deliver solid returns if they continue to track the market on a regular basis.
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