Penny Stocks are those stocks, which are trading below their paid up value. So If the share of a company whose paid up value is Rs. 10 is trading at Rs.5 it is known as a penny stock. The volumes in such stocks are low and generally they move a lot more than the broader indices. So if the Sensex moves up 20% the penny stocks are likely to move a lot more than 20%. These are generally considered dangerous because they have low volumes and are easier to manipulate by the Promoter and other speculators.
