Introducing Hot Stocks

Introducing Hot Stocks

Trading and investments in the stock market can really get tricky sometimes. There are times when certain stocks start trending merely owing to the sudden spike in popularity while some others could be genuinely performing. So at 5paisa we have added a new Hot Stocks segment to our Idea section where you will find everything you need to know about the buzzing stocks in the market. Click here to explore the Hot Stocks Segment.

#AbThoSabkoPataHai that at 5paisa we’ve always aimed at making investors independent and have strived to make Investing Easy and Rewarding. With the introduction of this new segment, 5paisa further aims at reducing the confusion around investment in stocks which you Can’t afford to Miss, thus helping you make better investment decisions. 

By intuition as the name suggests, these are the stocks which are buzzing stocks as of that moment in the market. They might have witnessed a recent activity or any event which had pulled an interest from a huge number of traders/investors. 

How are they derived? 

Any 5paisa platform user (web or app) who comes to trade has an option to watch the activity of a stock by adding that stock to his/her watch-list. Everyday we look at 5P universe activity and the stocks that are witnessing a demand-surge from customers. With this into consideration, Hot Stocks are derived based on below parameters:  
Users on the stock through their watch-lists 
Volume built up recently for a particular stock
Corporate Action/Research 
Market Buzz/News

All the above mentioned parameters are taken into account by our engine and our algorithms run on top of this information to finally come up with the top 3 stocks as Hot Stocks everyday at 5pm. The idea here is to leverage the concept of social trading and put forth the indicative responses from the same. 

Eg: Below are the 4 stocks which were declared as Hot Stocks recently: 

HDFCBANK got a green flag from the RBI to re-issue the new credit cards along with more fund-raise which gained significant traction to make a Hot Stock on 19th Aug. 

 TATASTEEL prices have been on the rise for a while which created a short term buzz in the stock and it came up as a Hot Stock on 17th Aug.

ZOMATO has created quite a buzz in the market since its IPO and has witnessed price and volume fluctuations recently, hence designated one of the Hot Stocks. 

IRCTC has observed some shifts in prices which also fueled the change in volume percentage which triggered it to be a Hot Stock on 15th Aug.

Where can one find the Hot Stocks in the app? 

Hot Stocks can be found at the Idea section, once you scroll to the bottom of the page you can see the stocks under the Hot Stocks banner. These get refreshed everyday at 5pm. 

Behavioural trading has a huge impact on traders. Mass trading behaviour certainly puts a significant impact on one’s decision about trading/investing. Hot Stocks in a way, provide an insight into how the mass is reacting to a particular market event and narrows it down to the top 3 stocks which attain the maximum user interest. For 5paisa, currently more than 6% of the daily trading base also trades in Hot Stocks just in the cash segment which also confirms the theory how mass behaviour affects a significant chunk of trades and Hot Stocks provides an insight into where the action is. Below is a trend of how on daily basis, out of all the customer traded in cash segment, how many have checked out the idea page and also traded in Hot Stocks:

5P universe is also adopting Hot Stocks well, there has been a positive response so far in the activity surrounding Hot Stocks. Below are two such examples: 

ZOMATO has seen a 7+% increase in # of customers watching the stock in just 10 days around when it was released as a Hot Stock.

What is the significance of Hot stocks? 

The Hot Stocks provide an idea about which are the stocks that are most buzzing currently. However, it may not be necessarily true that these stocks will register a positive change in price in the next few days. Any negative news about a stock can propel a downturn and the stock price may decrease further. Hence, while looking at Hot Stocks, we’re only bothered about net momentum or absolute change in prices.  

Based on the last 30 days, 42% of these Hot Stocks registered a positive price change and 53% showed a negative price change within 5 days from the day they were released as Hot Stocks.
While, on an average, there was a 4% change in price within 5 days which presents a great opportunity for a trader. For example, Zomato was released as a Hot Stock on 3rd Aug and it witnessed a sharp 10% downturn within the next week. If we look at its price trend, it’s clear how the prices have varied significantly in the vicinity of days when it was released as a Hot stock.

How can one act based on the Hot stocks? 

Since the Hot Stocks provide an idea of which stocks are attracting maximum of eye-balls, it inherently captures the stocks which have had a sudden movement lately or is expected to observe one such movement within days. Please note that the Hot Stocks are indicative and not advisory. One can buy these stocks, hedge these stocks or trade in options based on the nature of the movement of these Hot Stocks. These are not the recommended stocks, rather these are stocks which come out on top based on market insight and analytics along with preliminary AI algorithms. Before taking an action based on Hot Stocks, users are advised to look into the past trends and patterns and understand why a certain stock might be gaining a huge traction in the market. 

What’s next in Hot Stocks?

Going ahead, along with the Hot Stocks and the current info (1-Day and 7-Day price changes, CMP and no. of customers watching the stock), we would provide how many of the stock yielded positive returns and how many of these have yielded negative returns in T+5 days based on last 30 days of Hot Stocks. There will be a detailed stock level view option which would allow users to look into in-depth performance for each Hot Stock. Along with these if there is a stock which is recently released as a Hot Stock for the first time, it will be flagged as New and you’ll get a notification for the same as well. Have you then checked it out yet, if not, you might just want to have a look at it first. Hots Stocks is now available in the Ideas section on 5paisa app

We request you to follow this link for Disclaimer pertaining to Hot Stocks.