Blue chip stock is qualified as a high-quality and usually high-priced stock. It has high price because of public confidence in company’s long record of steady earnings.
Blue chip company is very strong financially, with a solid track record of producing earnings and only a moderate amount of debt. It also has a strong name in its industry with dominant products or services. Typically, these companies are large (international) corporations that have been in business for many years and are considered to be very stable.
Blue Chip Stocks to give stability to your portfolio over long run giving steady returns and low volatility. Some of blue – chip stocks which you can consider investing in ( not listed in any specific order) :
Telecommunications : Bharti Airtel
Oil Drilling and Exploration : ONGC
Refineries : Reliance Industries Limited
Mining/Minerals : Coal India
Power Generation/Distribution : NTPC
Cigarettes : ITC
Information Technology : Infosys , Tata Consultancy Services (TCS)
Banks : State Bank Of India , ICICI Bank , HDFC Bank , Axis Bank
Steel – Large : Tata Steel
Auto : Tata Motors
Engineering – Heavy : Larsen and Toubro (L & T)
Why one should invest in blue chip stocks ?
What would be the attractions of blue chip stocks?
1. Great long-term rates of return.
2. Relatively secure, less volatile long term investment category
Though above two points are true , investors should keep in mind that such stocks may not have growth momentum as some of small and mid cap peers since they have already grown into enormous businesses.
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Hi,
I want to understand what is the meaning of Bluechip stocks. Why they are called bluechip stocks…. MFs named as “Franklin India bluechip equity” and “ICICI pru focused Bluechip equity” will invest in Bluechip stocks or what. IS it same to invest in these funds or bluechip stocks?
Hi
Yes , blue chip stocks are relatively stable companies and generally market leaders in their respective fields. They exhibit excellent financial performance , strong cash flows and always look to expand its business.So such stocks are relatively less volatile then other stocks.
For instance , ICICI Pru Focussed Bluechip Equity Fund has bluechip companies such as Axis Bank , Bajaj Auto , ITC , Reliance , Bharti Airtel .
With Mutual Fund , you diversify across various blue chip companies rather then buying one stock of a blue chip company.
Hope it helped
Thanks
Salil
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