What are hot stocks? How to identify it easily?
Hot stocks
Hot stocks are those that have experienced consistent market outperformance due to strong financial performance, making them highly sought-after shares. During an IPO, these equities are frequently the subject of intense media coverage, which piques investor interest.
As excitement surges, investors get on board, resulting in a fall in supply and an increase in demand for a particular stock. The short-term gain in stock price is therefore usually significant.
Even after the initial excitement has faded, traders continue to try to sell the shares for more than the company is worth, which lowers the share price. Even though some IPO stocks are pricey, buying stocks before they list can yield substantial profits for early investors.
Furthermore, the enthusiasm around an IPO draws investors to the sector the firm operates in, increasing the stock values of companies in the same industry. Outside of an IPO, a stock could be highly sought after because of its dividend payments or because of its quarterly performance that boosts investor confidence.
How can one tell which stocks are hot?
The finest stocks to purchase now or hold for future investment can be found using the following indicators.
Price Variation:
A hot stock will experience a significant price increase regardless of the industry. When the share value increases quickly, it is best to purchase shares.
Growing Volume:
The trading volume connected to the rising price movement can be used to assess if a stock is hot.
One of the most popular momentum indicators that may also be used as a trend indicator is the relative strength index, or RSI. An RSI number above 50 indicates a bullish trend for stocks or an index, while one below 50 indicates a bearish trend. RSI is also frequently used to measure price-indicator divergence.
Moving Average Convergence Divergence (MACD):
The MACD makes use of the relationship between a 12- and a 26-period exponential moving average (EMA). In this case, the acceleration stops when the two moving averages converge, and the stock gains momentum when they diverge. The indicators consist of the signal line and the MACD. The difference between the two EMA is recorded by the signal line, which is the 9 EMA of the MACD line.
Using the signal to trade profitably while thinking about which stocks to buy today depends on the trader’s initiative in conjunction with the aforementioned indications.
How can one regularly determine which stocks are hot?
To find the hot stocks of the day, one might check the NSE’s top gainers for that particular day. For example, at 3 p.m. on August 2, Divi’s Lab, Nestle India, and Hindustan Unilever are the top 3 gainers at the NSE. On August 2, these three stocks are the hottest stocks. Daily hot stocks fluctuate every day.
What are some popular stocks?
The technical term “hot stocks” does not exist. However, in layman’s terms, hot stocks are those whose prices are rising and whose trading volume is currently high. This indicates that there is now a lot of demand for certain stocks. Hot stocks are also occasionally associated with stocks in industries that are experiencing a boom at the moment. For instance, a lot of companies in industries like software services and IT are regarded as hot stocks.
Please note that the views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
-Daisy