Blue chip stocks have a large market capitalization with an excellent reputation, a history of solid fundamentals, and regularly pay dividends to their shareholders. NSE Blue chip stocks are relatively less volatile than other medium and small stocks and are less affected by adverse market conditions. Blue chip companies have extensive distribution networks that allow them to be easily recognized and sell high-quality products and services throughout the country.
What is a blue-chip company?
If you have ever tried the game of poker, you know that the blue chips represent the highest dollar value in the game compared to the white and red poker chips. Oliver Gin gold, a Dow Jones employee, gave the company the term “Blue Chip” in 1923. The term thus found its way into the stock market and was an attribute of an established and successful company.
Definition of a Blue-Chip Company – A blue chip company is an established company that has a large capitalization, a solid reputation, several years of growth and success, and products and services that are recognized in the business community.
Should You Invest in Blue Chip Stocks?
It all depends on your preferences, risk tolerance, goals and time horizon. However, it is recommended to invest in shares of blue-chip companies because you can benefit from the following:
- Invest when you want consistent returns.
- You can achieve long-term financial goals. These currents facilitate the development of a stable plant body.
- These stocks are least affected by inflation, volatility, stagnation, or recession
- They are quite predictable, so blue chip stocks are a good choice for people looking for security in their investments
These are stocks that usually offer superior returns over the long term. Some people also associate blue chip stocks with blue betting discs in poker, where blue discs have the highest value while white discs have the lowest. Several parameters can be seen to identify blue chip companies. In addition to market capitalization and price-earnings ratio (PE), these include constant annual income over the long term, stable debt levels, average return on equity (ROE) and interest coverage ratio. By market capitalization, the leading blue chip stocks list in India today are State Bank of India (SBI), Bharti Airtel, Tata Consultancy Services (TCS), Coal India, Reliance Industries, HDFC Bank, ONGC, ITC, Sun Pharma, GAIL (India), Infosys and ICICI Bank.
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