Beta stocks are extremely volatile equities that respond quickly to market movements. It measures a stock's volatility in comparison to the general market. The stock market generally has a value of 1.0. The rank of various companies depends on how far they are from this value of 1.0. A greater value than 1.0 indicates that a stock's volatility exceeds that of the market. If a stock fluctuates less than the market, its beta value is less than one. High-beta stocks are a popular investment choice for traders seeking better profits.
Let’s learn about high beta in stocks in this blog and also look at some of the top beta stocks in India.
What are High Beta Stocks?
High-beta stocks are stocks with a beta coefficient larger than one, suggesting that they are more volatile than the overall market. These stocks tend to have bigger price fluctuations in either direction than the market, giving them high-risk, high-reward opportunities. So their share prices are extremely volatile and respond quickly to market movements. All share market instruments have a stock beta. It is calculated using market performance and the company's fundamental strength to assess risk and return.
Table of Content
- What are High Beta Stocks?
- Top 10 High Beta Stocks in NSE
- High Beta Stocks in NSE
- What are High Alpha and Low Beta Stocks?
- Should You Invest in High Beta Stocks?
- How is Beta Calculated in High Beta Stocks NSE?
- How to Find the Beta of Indian Stocks?
- What is the Importance of Beta in Stock Valuation?
- How to Invest in High Beta Stocks NSE?
- Who Should Invest in High Beta Stocks?
- Factors to Consider When Investing in High Beta Shares
- Features of the Top High Beta Stocks NSE
- Benefits & Risks of Investing in High Beta Stocks
Top 10 High Beta Stocks in NSE
There are several high beta NSE stocks. Here’s the top 10 high beta stock list.
| Company | Share Price | Market Cap ( in Cr.) |
| IndusInd Bank Ltd | Rs. 1,482.05 | Rs. 1,15,564 |
| Bajaj Finserv Ltd | Rs. 1,619.00 | Rs. 2,58,596 |
| Tata Motors Ltd | Rs. 963.20 | Rs. 3,19,178 |
| Hindalco Industries Ltd | Rs. 614.75 | Rs. 1,37,934 |
| Axis Bank Ltd | Rs. 1,029.10 | Rs. 3,18,302 |
| Tata Steel Ltd | Rs. 162.10 | Rs. 3,19,178 |
| State Bank of India | Rs. 750.00 | Rs. 6,67,025 |
| Mahindra and Mahindra Ltd | Rs. 2,082.90 | Rs. 2,59,020 |
| Adani Enterprises Ltd | Rs. 3,026.95 | Rs. 3,45,072 |
| ICICI Bank Ltd | Rs. 1,067.25 | Rs. 7,48,657 |
Disclaimer: This list of semiconductor stocks contains data updated as of 19th April 2024. However, it's important to conduct detailed research before making any investment decisions in these stocks.
High Beta Stocks in NSE
Let’s go through a quick overview of the high-beta Indian stocks on the NSE.
What are High Alpha and Low Beta Stocks?
High alpha and low beta stocks produce high returns relative to their risk. Their beta coefficient indicates this and these stocks are often less volatile than the overall market. This is because the beta coefficient of high alpha low beta stocks is less than one. However, their alpha coefficient indicates that they give larger returns than the market.
Should You Invest in High Beta Stocks?
The decision to invest in high-beta stocks depends on two factors. They are dependent on your trading experience and your risk tolerance.
Your Trading Experience
Experienced traders or investors possess a deeper understanding of the share market. They are better at analysing market fluctuations. This helps them to enter and exit a trade and also balance their exposure to a particular stock. They also consider domestic and international market factors when researching stocks. This makes experienced investors better prepared to invest in a high-beta stock. If you are new to investing, you need first learn about the markets before investing in beta high stocks
Your Risk Tolerance And Expected Returns
High-beta stocks are generally risky but have the potential to create significant gains. As a result, you invest in them only if you can afford to take high risk. You should avoid investing in these stocks if your risk appetite is low. When the market weakens, such equities might fall sharply. So, you will incur losses till the market regains strength.
How is Beta Calculated in High Beta Stocks NSE?
Beta value is a measure of a stock's volatility, which is calculated by comparing the returns of the stock and the overall market. This value of the whole market is considered as 1. A stock with a value of more than 1 is regarded as more volatile than the market, while a company having a value of less than 1 is considered less volatile than the market. To determine the beta of high beta stocks NSE, analysts often employ regression analysis to compare its returns to the returns of a relevant market index, such as the NSE.
How to Find the Beta of Indian Stocks?
Follow the steps mentioned below to find the beta of Indian stocks.
- Obtain historical prices for the stock.
- Obtain the historical prices for the benchmark index you’re comparing with.
- Calculate the percentage change for the same period for both the stock and the benchmark index. The period might be daily, weekly, monthly, etc.
- Calculate the stock’s variance.
- Find the stock's correlation with the benchmark.
- Finally, divide the covariance with variance. So, Beta = Covariance / Variance
What is the Importance of Beta in Stock Valuation?
Beta is an essential metric in stock valuation. It shows a comparison between the risk of an individual stock and the entire market. Beta value actually measures and indicates how much the price of a stock may change as compared to the market. This can assist investors in assessing the possible risks and rewards associated with investment in that stock.
How to Invest in High Beta Stocks NSE?
You have several choices for investing in such high beta firms on the NSE. You might explore investing in individual companies, high beta ETFs, or mutual funds. You may invest in futures and options, as well as create systematic investment plans (SIPs) for disciplined investing. However, always undertake sufficient research before investing in any of these.
Who Should Invest in High Beta Stocks?
Investing in high-beta stocks may be appropriate for investors who are ready to take on more risks. They may have a higher risk tolerance and a longer investing horizon. In addition, investors looking to invest in growth industries may choose high beta stocks. Such firms usually give exposure to market sectors that may grow in the future.
Factors to Consider When Investing in High Beta Shares
Consider the following factors before investing in high beta shares.
Features of the Top High Beta Stocks NSE
Here are the key features of high beta stocks.
Benefits & Risks of Investing in High Beta Stocks
Let’s now understand the benefits and risks of investing in high beta stocks. Here’s a table highlighting the key ones.
| Benefit of Investing in High Beta Stocks | Risk of Investing in High Beta Stocks |
| High beta stocks tend to outperform the market during upswings, offering the chance for significant gains. | High beta stocks also experience larger swings in price, leading to potentially steeper losses during market downturns. |
| Strong returns from high beta stocks can outpace inflation, preserving the value of your investment. | The future performance of high beta stocks is uncertain, making them more speculative investments. |
| High beta stocks are often associated with young, fast-growing companies with high growth potential. | High beta stocks can be more sensitive to changes in interest rates, which can impact their price. |
Conclusion
High beta stocks often have higher beta coefficient values. They are very volatile, as share values may fluctuate fast. These stocks are too vulnerable to market fluctuations. Small changes in market sentiment or global events can cause big price variations. High beta stocks generally tend to have the potential to generate higher gains, but they also come with a greater amount of risk. Before investing in such stocks, you should properly assess your investment goals and risk tolerance. Consider your investment objectives, financial strength, and risk appetite to make educated investment decisions. Furthermore, you may invest in high beta stocks on a trusted online trading app that allows you to invest in all kinds of stocks. This will help you to diversify your portfolio with a variety of high beta stocks.
FAQs on High Beta Stocks
Yes, high beta stocks might be suitable for intraday trading. These companies are more volatile than low beta stocks and display higher price movements over short periods. This makes them high beta stock for intraday. However, you should conduct thorough research before investing.
The appropriate beta for a company is determined by your investing objectives and risk tolerance. A beta of 1 often suggests that the stock moves in lockstep with the entire market. A beta larger than one indicates more volatility.
Yes, investors may earn from high beta equities listed on the NSE intraday trading. These stocks are more.
The risks associated with beta stocks include extreme price fluctuations and high sensitivity to the prevailing market conditions.
No, high beta stocks may not be suitable for all investors. Only investors with a high risk tolerance levels should consider investing in such stocks.
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