Let us get this straight blue chips are the best when it comes to investing in the stock market and I am big fan blue chips.
Blue chip Definition: Now the blue chip definition can vary from country to country and stock market to stock market however some of the features of a good blue chip company will never vary
A blue chip company will be that has huge revenues like more than 1000 crores and has stable earnings and a capable management to boot. They have well accepted products ion their portfolio and generally are market leaders in their industries.
Top reasons for investing in blue chip stocks
1) Stability of earnings – Since these companies have huge revenues and have good management you can very well assume that they will have the stability of earnings and that will mean that you will be able to predict the future for them very easily.
2) Less volatility – Blue chips typically have stable stock prices. That does not mean that the prices do not fluctuate but these are not as volatile as the mid caps or the small caps where the volatility is so huge that you cannot predict the prices on any given day.
3) Less risky – These stocks are well known leaders in their industries and that translates into the fact that companies have more cushion to afford risks and have established good practices to help them wade through downturn in the economy. It helps as they are then less risky to shareholders. These are ideal for those investors who have aversion to risk
Here is my list
Reliance Industries (RIL) – The Company that started the equity cult inIndiais the one which is the biggest company inIndiain terms of revenues. Their core competency lies in executing big complex projects in record times. They enjoy almost a monopoly inIndiain terms of petrochemicals. Reliance has a huge cash reserve that is helping them invest in the next revolution that is in retail.
Infosys – This is the start among the Indian IT industry and was the one that gave the wings to the Indian outsourcing story. It has a good operating model and is definitely among the bellwether Indian stocks. The management of this company is superb and has huge profit margins that they enjoy.
TCS – Coming from the TATA stable this company is largest IT company. It does not have margin that Infosys enjoys however they are the leaders in terms of revenues.
L & T – The largest and the best company in the Infrastructure space. It has engineering skills that nobody can match. WithIndiaand the world building roads, airports, rail and power plants L&T is best placed to take advantage of it.
SBI – In the banking sector this is one company that you cannot ignore. A public sector behemoth that no one can match in terms of its reach. It is the best among the banks.
ICICI Bank – Again in the banking sector this company has transformed itself from a govt owned entity to a private bank and has grown at a pace which is definitely striking. With strong financials it is the leading bank inIndia.
Bharti Airtel – The largest and the best telecom provided inIndia, it is a company which has huge revenues and is expanding toAfricawith gusto. A blue chip which was a mid cap not very long ago.
TATA Motors – A stalwart among the automotive majors with a TATA name this is leader in the commercial vehicle segment.
Hindalco Industries – From the Aditya Birla stable this company is the best in the aluminum segment. It is a leader in the commodity segment and has acquired international companies to grow big in size.
HindustanLever – This is best company which shows the Indian consumer story. In the consumers minds this company is the first as it has products which touches everyday lives like soaps, shampoos, detergents, sauces, jams etc. This is best defensive stock in the Indian share market.