Pocketful’s Nifty 100 low volatility stocks scanner helps an investor in identifying the companies that have low volatility compared to other stocks. These companies generally have low beta and are prone to stock market fluctuation. On the screener page of Pocketful, you will find the latest list of Nifty 100 low volatility stocks along with their essential data, such as market capitalization, etc., at one place.
What are Nifty 100 Low Volatility Stocks?
Nifty 100 low-volatility stocks are part of the Nifty low-volatility index, which has shown low volatility over the last year. These are the shares of large and well-established companies, the prices of which move steadily compared to other stocks. These stocks are generally considered as an investment option by the conservative investor because of lower risk and stable price movement. It includes defensive stocks that do not fluctuate during a volatile market. The Nifty 100 low volatility index is managed by the NSE Indices Limited, which is a subsidiary of the National Stock Exchange.
Features of Nifty 100 Low Volatility Stocks
The key features of Nifty 100 low volatility stocks are as follows:
- Low Price Fluctuations: The stocks of the Nifty 100 low volatility index have historically shown low volatility during the uncertain market conditions.
- Top 100 Companies: These stocks include companies from the large-cap universe. This ensures that only fundamentally strong companies are included in it.
- Diversification: The Nifty 100 low volatility stocks are included from different sectors such as pharma, banking, IT, etc. Hence, it provides a diversified investment opportunity.
- Conservative Investors: These stocks are generally suitable for conservative investors who do not wish to seek high volatility in their investment portfolio.
Advantages of Investing in Nifty 100 Low Volatility Stocks
The key advantages of investing in Nifty 100 low volatility stocks are as follows:
- Low Risk: The key advantage of investing in Nifty 100 low volatility stocks is the lower risk. The stocks of the Nifty 100 low volatility index do not fluctuate as much as the broader market.
- Long-Term Wealth Creation: These stocks are suitable for investors who are looking to create wealth in the long run, along with a focus on capital preservation.
- Steady Returns: Even during the sharp ups and downs of the market, these stocks have posted consistent returns over time.
- Reduce Stress: As these stocks show lower volatility, investors do not panic during the market corrections.
Risks of Investing in Nifty 100 Low Volatility Stocks
The key risks of investing in Nifty 100 low volatility stocks are as follows:
- Lower Return: During bull markets, these stocks tend to underperform because they have low beta.
- Sectoral Risk: These stocks are often from sectors such as FMCG, Pharma, etc. This can increase the risk of sector concentration in the portfolio.
- Valuation Concerns: Because of increased demand from conservative investors, such stocks can sometimes become overvalued, reducing future return potential.
- Decline in Market Crash: These stocks are not completely prone to market corrections. They can also decline during the market crash.
How to Identify High-Growth Nifty 100 Low Volatility Stocks
To identify the high-growth Nifty 100 low volatility stocks, one can follow the steps mentioned below:
- Consistent Growth: One must identify the company that has shown consistent growth in revenue and profit over time.
- Low Debt: Along with the financial performance, one must identify a high-growth Nifty 100 low volatility stock that has a low debt level or have low-debt to equity ratio. This helps in identifying the company that can grow sustainably without any financial stress.
- Valuation: The company must be reasonably valued, and it should not be overprices therefore, one must look for metrics such as P/E ratio, etc.
- Institutional Investor: The interest of the institutional investors also plays a significant role in deciding the future of high-growth Nifty 100 low volatility stocks.
How to Invest in Nifty 100 Low Volatility Stocks?
To invest in Nifty 100 low volatility stocks, one can follow the steps mentioned below:
- Opening a Demat Account with Pocketful: To invest in Nifty 100 low volatility stocks, one is required to open a demat account with Pocketful. It offers a lifetime free demat account along with zero brokerage on delivery trades.
- Completing KYC: To start investing in Nifty 100 low volatility stocks, an investor needs to complete their KYC by providing basic documents such as PAN, Aadhaar, bank details, etc. This is a mandatory step.
- Using Pocketful Stock Screener: An investor is required to visit the website of Pocketful as soon as the demat account is opened successfully. The filters on the screener page help an investor in analysing the stock.
- Choosing Stock Carefully: The next step is to choose the stock from the Nifty 100 low volatility index, and the selection must be made on the basis of the company’s growth, performance, etc.
- Gradually Invest: It is advisable not to invest the entire amount at one go. Gradual investing helps an investor in taking advantage of market movement.
- Investment Tracking: Once the investments are made, a timely review of the same is necessary. To book the profit, regular tracking is suggested.
The key factors that influence the performance of Nifty 100 low volatility stocks are as follows:
- Interest Rate: The interest rate in the economy affects the performance of Nifty 100 low volatility stocks. A falling interest rate in the economy affects the defensive stocks positively.
- Sector Performance: Nifty 100 low volatility stocks generally consist of defensive sectors such as FMCG, Pharma, etc., hence their performance depends on how these sectors perform.
- Earnings of Companies: Companies with stable revenue sources and strong balance sheets determine the performance of such stocks. If their revenue is increasing, their stocks will perform well.
- Economic Conditions: The economic conditions of the country, such as GDP, inflation, etc. Generally, if the country has a stable economy, it will support the steady performance of the company.
Factors to Consider Before Investing in Nifty 100 Low Volatility Stocks
The key factors that an investor is required to consider before investing in Nifty 100 low volatility stocks are as follows:
- Financial Performance: The key financial metrics of the company, such as its revenue and profit growth, debt level, etc. An investor must consider companies that have stable earnings.
- Valuation Levels: Most of the stocks generally trade at a premium because of the focused investment approach of investors. Hence, one must check the company’s valuation and invest only in companies that are fairly valued.
- Investment Horizon and Return: One should invest in Nifty 100 low volatility stocks if they have a longer investment horizon, along with a stable return with low volatility.
- Key Ratios: Before investing in any Nifty 100 low volatility stocks, an investor should analyse the companies’ key ratios such as P/E, ROE, ROCE, etc.
Why Is This Nifty 100 Low Volatility Stocks List Useful?
The Nifty 100 low volatility stocks list is useful for investors who prefer to have stability in their portfolio instead of excessive market volatility. Instead of looking across thousands of stocks, this list gives you a list of companies that have historically shown lower volatility and relatively consistent performance. For a beginner its helps as a starting point to understand the defensive and stable companies, and for an experienced investor, it acts as a ready framework to track the market trend. Overall, this list serves as a practical tool for creating a balanced and low-volatility investment portfolio during a volatile market.
Conclusion
In conclusion, investing in Nifty 100 low-volatility stocks is suitable for investors seeking stable, consistent returns over time. These stocks show comparatively less volatility than the market and have low beta. And Pocketful’s screener Nifty 100 low volatility stocks list serves as a readymade tool for both beginner and experienced investors to identify and compare the low volatility stocks. However, these stocks do not always post high returns in bull markets, but they improve overall volatility in the portfolio. However, before making any investment in Nifty 100 low volatility stocks, one should consult their investment advisor and proper research should be conducted alongside.
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