Stock trading can be a risky business, but sometimes, risks in the stock market may potentially prove to be lucrative. You have to remember that if you wish to grow capital, it has to be invested in some kind of instrument. Whether you have a high-risk appetite or not, you may still want to invest in the stock market. Something that is related to risks in the stock market is volatility. When markets are volatile, there is clearly more chance of risk. Nonetheless, there is a technique through which you can assess the volatility of stocks. This is by employing something called “beta”.
So what exactly is “beta”? It is simply a measure to decide how volatile a stock may be relative to the wider market or any benchmark index used to assess its volatility. It is calculated through a statistical method. As an investor, you should know that stocks that have a beta value of more than 1 are referred to as “high-beta” stocks. In simple language, these stocks are known to be volatile, and hence, riskier than others. Still, if you consider the risk and reward relationship that the stock market is concerned with, you may think that such stocks tend to give you high returns. However, nothing in the stock markets is etched in stone and there may be no guarantees of returns in the stock market.
High-beta stocks may be great for investors and traders when markets turn bullish as they are typically estimated to outperform certain benchmark indices. Nonetheless, on their own, they may prove highly volatile but give you potentially significant returns in the long run. If you choose to invest in high-beta stocks including any mentioned in the table below, you may want to do your company stock research beforehand and then invest.
Here are some of the top stocks with a high beta value in India today (as listed on the National Stock Exchange – NSE):
| Name of Stock/Company | Sector | Market Capitalisation (Rs. cr.) | Beta | 3-Year CAGR | 5-Year CAGR |
| Tata Motors | Four Wheelers | 1,68,935.86 | 1.73 | 62% | 18% |
| Adani Enterprises | Commodities | 2,05,542.20 | 1.66 | 105% | 72% |
| State Bank of India | Public Banking | 4,84,740.30 | 1.40 | 36% | 13% |
| Bajaj Finance | Consumer Finance | 3,58,899.05 | 1.96 | 25% | 19% |
| Tata Steel | Iron & Steel | 1,29,731.57 | 1.40 | 40% | 14% |
| Mahindra and Mahindra | Four Wheelers | 1,45,108.03 | 1.32 | 34% | 9% |
Note: The top high-beta stocks listed here are as of April 2023 data from the Nifty 50 list of high-beta stocks.
It is beneficial to look into a few specifics about the high-beta firms listed in the table above:
Tata Motors is a leading global four-wheeler manufacturer having a portfolio that ranges from cars and SUVs to trucks, defence vehicles, buses, and pickups.
Adani Enterprises stands as the flagship of the Adani Group of Companies and has diverse businesses under its helm, including renewable energy, power, airports, food, agro, mining services, and more.
An Indian multinational public bank, State Bank of India offers banking and financial services and has potentially been a historic winner for investors in the long term.
Bajaj Finance is a top Indian non-banking financial business and is a subsidiary of the larger Bajaj Finserv Group.
A leading iron and steel conglomerate and part of the erstwhile Tata Group of Companies, Tata Steel stands out as one of the potentially best blue-chip companies to invest in for the long term.
A leader in the automotive sector in India, the parent group also engages actively in business management and farm services. The company is a stalwart in its industry and a potential success for long-term investing requirements.
The reason why you may view high-beta stocks as coming from large companies is that larger companies may be more prone to higher returns in the long term, but the higher the return, the higher the risk in bearish times. Furthermore, certain smaller companies may not be able to bear fluctuations in the market and these may be classified under the umbrella of “high-beta” stocks for this very reason. Whether you choose to invest in these kinds of stocks or not, you must be sure of your own individual goals and financial requirements in advance. While you are pondering the pondering of high-beta stocks, you may consider heading to Angel One to open your demat account and begin your investing journey.
The beta of any stock is essentially a measure, arrived at statistically, to measure the volatility of that particular stock compared to the overall market or benchmark index.
There is no such thing as the best beta for any stock since beta is a representation of a stock’s volatility and how risky it is. The beta measure is unique to the stock it represents.
You can get information on the beta of a stock via any financial portal or any brokerage online which gives you the beta.
Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations
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