What are Blue Chips Stocks? 4 Most Expensive Blue Chip Stocks In India? Should You Buy It?
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The stock market game is very different. If you are a beginner in the stock market, it can sometimes take time to understand stocks, as the shares in the market are classified into several groups. For example, a company's stock can be defined as a small-cap, mid-cap, or large-cap company, depending on the market capitalization. Also, stocks in the market are classified based on stock characteristics, such as growth stocks, value stocks, and dividend stocks.
As we all know, the stock market is a broad topic, and the views of experts also differ. But it is seen that most experts agree on the credibility of blue chip companies. Moreover, experienced investors in the stock market pay special attention to a particular type of stock: Blue Chip. Apart from this, it has also been seen that when newbies enter the exciting world of the stock market, they are advised by experts to invest in blue chip stocks. This is because shares of blue-chip companies are considered a safer option than other stocks.
However, being new to the investment world, they need help understanding it correctly and clarification about Blue Chip shares
Stocks of well-known and high-quality companies that are market leaders in their respective industries are called blue chip stocks. In a true sense, a company called blue chip stock comes with an excellent reputation and a large market capitalization. In addition, that company has a history of sound fundamentals. These companies have stood the test of time and are respected by their customers and shareholders, as they pay regular dividends to their shareholders.
Blue chip stocks are relatively less volatile than other stocks and less affected even during adverse market conditions. In addition, blue chip companies have such large and well-known stocks because they have an extensive distribution network that sells quality products and services across the globe.
Blue chip companies have a history of consistently good performance and are well-established. In addition, blue chip companies are reliable and financially sound, meaning they are usually debt free or have very little debt. Usually, these companies have become household names, due to which investors are attracted to them.
Why are they called Blue Chips?
By the way, there are two types of talk about this in the stock market. First, the credit for coining the phrase 'blue chip' goes to Oliver Gingold, a Dow Jones worker. In 1923 he wrote an article in which he used the term 'blue chips' to refer to the value of stock trading. He defined the stock as a blue chip for a company whose value was $200 or more.
Second, some people believe that blue chip companies are named after the game of poker because the card called blue chips is the most powerful and valuable. Similarly, the more valuable company in the stock market is called a blue chip company. The term blue chips are now more commonly used to define high-priced stocks in the stock market.
3.1 Blue chip stocks provide relatively stable returns
The most prominent feature of blue chip stocks is that they provide stable returns compared to other stocks. Therefore, it is more reliable in the eyes of the people. It cannot be denied that blue chip stocks do not give as many returns as mid-cap and small-cap companies. However, even though the proceeds from these are low compared to other shares, it offers stable returns. Hence, long-term and conservative investors prefer to invest in it.
3.2 High Market Capitalization
The market value of blue chip companies is very high. It is because they have built their network so that they have direct access to the customers and can easily reach their products and services to the customers. Going by the numbers, the market capitalization of blue chip companies is more than 20,000 crores, and their high valuation makes them more expensive than other stocks. Let's look at the market capitalization in India. The prominent blue chip companies are - Tata Consultancy Services, State Bank of India, Reliance Industries, Bharti Airtel, Nestle, ICICI Bank, HDFC, Infosys, ITC, ONGC, and Sun Pharma.
3.3 Pays Regular Dividend
The most important thing about blue chip companies is that they provide regular dividends to their investors. In this, companies pay regular dividends quarterly or annually, respecting their shareholders. These things attract a lot of new investors. Although they do not pay the same dividend every time, sometimes they may reduce the dividend payout and use it for the growth and expansion of the company. Mostly, they pay dividends out of the profit made from them. They motivate their shareholders to invest more and reward them for trusting the company.
3.4 Less Risky
Beginner investors prefer blue chip shares because the stocks of blue chip companies are comparatively less risky than other stocks. Even though mid-cap and small-cap stocks have good returns, they carry many risks, as companies with mid-cap and small-cap stocks are less financially sound. In contrast, companies with blue chip stocks are financially sound, excellent in management, and low in debt. As a result, when the market is volatile or bearish, it has a minor effect on blue chip companies. Blue chip companies in India also have good cash flow. Most companies are debt free or have very little debt due to always having sufficient capital.
3.5 Experienced Management
Management plays a vital role in the development of any business. In other words, good management acts as the backbone of the business. Likewise, a good management team plays a crucial role in the progress and functioning of the company. Blue chip companies' CFOs, CEOs, and board directors have vast experience and are known for their industry expertise. For this reason, blue-chip companies are more reliable.
3.6 Right Option For Long-Term Investment
The most significant player in the stock market is the one with a long-term vision, which means the one who enters the market for a long time. Therefore, investing in Blue Chip Stocks NSE would be wiser if you want to invest long-term. It is because blue chip companies go through slow but steady growth over time. Therefore, an investor can include blue chip companies in his portfolio to earn substantial returns at retirement.
So let's now see India's 4 most expensive blue chip stocks or companies and their stocks.
4.1 Reliance Industries
Indeed, this company needs no introduction. Reliance Industries is a big name not only in India but all over the world. The core businesses of Reliance Industries are telecommunications, petrochemicals, natural resources, energy, textiles, and retail.
Reliance Industries is a private company and the second-largest publicly traded company in India by market capitalization. Also, it is one of the most profitable companies. In terms of statistics, in 2007, Reliance Industries became the first Indian company to reach $100 billion in market capitalization. It is the highest-income tax-paying company in India in the private sector. The market cap of Reliance Industries is increasing year by year in the global market. Even a single share of this is becoming very expensive. The share price keeps changing every day. In August 2022, the market cap of Reliance Industries reached 16,20,000 crores in Indian Rupees.
4.2 Hindustan Unilever
Hindustan Unilever is one of India's oldest companies, which has existed for over 80 years. Today Hindustan Unilever is one of India's largest Fast Moving Consumer Goods (FMCG) companies. It is a subsidiary of the British Dutch company Unilever. You will find its products in every household in India.
Hindustan Unilever's flagship products include personal care products, water purifiers, beverages, foods, and cleaning agents. Some famous products include Lifebuoy, Lux Surf Excel, Rin, Wheel, Fair, etc. Hindustan Unilever's stock is costly due to its large market cap in India.
4.3 HDFC Bank
HDFC Bank is the largest private sector bank in India. Today it is playing a leading role in India's banking and financial services system. It is India's largest lender to the private sector by assets. This bank started in 1994, and today the market value of this bank is around Rs 776,526 crores.
HDFC Bank is known for providing innovative services in India. Which mainly includes two-wheeler loans, personal loans, loans against property and credit cards, wholesale banking, and retail banking. In terms of market capitalization, HDFC is the largest bank in India today. Also, it is the third largest company in the market, according to the Indian stock exchanges.
4.4 Asian Paints
Asian Paints is the largest paint manufacturer in India. Asian Paint was established in 1942. Asian Paints total turnover to date is Rs 285 billion, making it India's leading and Asia's 4th largest paint company. Today Asian Paint Company operates in more than 19 countries and serves consumers in more than 60 countries. Today, its shares have become very expensive. Asian Paints provides services related to Paints and Home Decor-related products, Coatings, and Bath Fittings.
There is no doubt that Blue Chip stocks In India 2022 are well-valued in the market and are some of the highest-quality stocks available in the market.
The Blue Chip Company's business is so strong that they have become the leaders of their industry. They have outperformed their rivals. Those blue chip companies also enjoy a competitive advantage over their business rivals.
If any of you want to start your journey in the stock market, then initially investing in large-cap stocks is very beneficial for them. And buying prime stock is even better.
These are the four most expensive blue-chip stocks in India. But they also have some limitations, which we will discuss in another blog. So one should be careful before investing in these stocks as well. The purpose of this blog is to provide information only.
Frequently Asked Questions
Blue chip stock has an excellent reputation and a large market capitalization. In addition, that company has a history of sound fundamentals. These companies have stood the test of time and are respected by their customers and shareholders, as they pay regular dividends to their shareholders.
Some most expensive blue chip stocks in India are:-
- Tata Consultancy Services Ltd.
- Hindustan Unilever Ltd.
- Reliance Industries Ltd.
- HDFC Bank Ltd.
- ITC Ltd.
- Bharti Airtel Ltd.
- Nestle India Ltd.
Blue chip stocks are less risky than other stocks, as companies with blue chip stocks are financially sound and have an excellent market capitalization. Hence, investing in blue chip stocks is a safe option.