New Delhi, Jan. 11 -- Penny stocks often grab investors' attention because of their low absolute price and the perception of high return potential. For many retail investors, these stocks appear to offer an affordable entry into the equity market, especially when compared to large-cap or even mid-cap shares trading at much higher values.

A key reason behind their appeal is the affordability bias - owning thousands of shares at a low price feels more rewarding than buying a few shares of an expensive stock. Retail investors are also drawn by the possibility of multibagger returns in a short period, as even a small price movement in penny stocks can translate into large percentage gains.

However, these stocks come with significant risks. ...