What is Blue Chip Stocks? How to invest in Blue Chip Company?
What is Blue Chip Stocks? How to invest in Blue Chip Company?
What is Blue Chip Stocks: In the last one or two years, the number of people investing in the stock market is increasing due to new discount brokers coming in and low brokerage charges and it is a favorite for those who love risk. Has become a source of earning income.
But there are many different types of stocks in the stock market, in which investing is very risky. While some stocks have low risk due to low volatility as well as profits are also low in them.
Now the best option left for retail investors in such a situation is Blue Chip Stocks. In this post, we will tell you what is blue-chip stocks and how this stock has become very important as per the requirement of the market at present, as well as how you can also invest in these stocks.
What is Blue Chip Stocks?
Blue Chip Stocks are shares issued by a company that is large in size, well-stabilized, and financially strong.
Their market capitalization is also very large and in general, this company is the main leader of its sector. For example - Reliance Industries Limited, HDFC Bank, Asian Paints, and Tata Steel.
Blue-chip companies are very popular in the market, on which investors trust a lot, as well as they are also known for giving Consistency Dividend and Stable Return.
Why are these stocks called blue-chip stocks?
There is an interesting story behind this, after the end of World War I there was a lot of change in the thinking of people, and games like poker became very popular.
The blue chips used in the game of poker were the most valuable, so keeping these chips in mind, a journalist working in an American newspaper was the first to share this with some big companies of America. The word was used and since then the word has become very popular.
Why is Blue Chip Stocks important?
As we told you earlier Blue Chip Stocks are stocks of some reputed and best companies in their field. Many things make such stocks important -
In such a stock, you get a stable return because the volatility of the stock is low due to the high market cap of the company.
Due to the high share of blue-chip stocks in the market, there is more liquidity in their stock, which makes it easy to get Buyer and Seller.
Stable return on equity (ROE), a high price to earnings (PE), etc. are also better than ordinary companies.
It is also a sector leader, so whenever there is growth in the sector, the highest growth is seen in these companies.
Some Disadvantages of Investing in Blue Chip Stocks!
Investing in blue-chip stocks can also result in losses, as no stock is consistently blue-chip.
For example - Airtel company stock was removed from blue-chip after the arrival of Jio, as its investors were suffering losses due to a reduced number of users, although currently it has been put back into blue-chip.
How to calculate blue-chip stocks?
Many investors want to invest in blue-chip stocks, but they do not know any easy way to find these types of stocks. To calculate blue-chip stocks, you can keep these things in mind: -
The market cap of the company should be more than 1 lakh crores. Because the big market helps in fighting the downturn in the cape trade so that you will not have much impact on the dividend you get.
The Price Earning Ratio (PER) of the Blue Chip stock you have purchased should be more than 15.
The company should be the leader of its sector or one of the top 3 companies.
Along with this, it is necessary to continuously increase the Revenue, Sales, and Net Profit of the company.
The Price Earning Ratio (PER) of the Blue Chip stock you have purchased should be more than 15.
The company should be the leader of its sector or one of the top 3 companies.
Along with this, it is necessary to continuously increase the Revenue, Sales, and Net Profit of the company.
[Note: You can take the help of a Screener to find blue-chip stocks.]
Based on all these parameters, you can compare companies with different Blue Chip stocks and choose any one or two companies based on your budget and investment.
Top 10 Blue Chip Stocks in India
| RIL | 1433447 |
| TCS | 1129323 |
| INFOSYS | 569974 |
| HDFC | 451894 |
| BHARTI AIRTEL | 288796 |
| ITC | 255946 |
| ASIAN PAINTS | 228371 |
| MARUTI SUZUKI | 219418 |
| WIPRO | 217414 |
| ADANI GREEN | 187277 |
How to Invest in Blue Chip Stocks?
Yes! If you have a good amount to invest in the stock market, then you should not adopt Day-Trading and invest in Blue Chip stocks, although you will get less profit in this, there is a 99% chance of making a profit and very few times. You have to suffer loss.
How to Invest in Blue Chip Stocks?
To invest in blue-chip stocks, you have to follow a simple procedure
1. First of all, you have to open your own Demat account. We would advise you to open your trading account on Zerodha, as the Brokerage Charge it takes is very less.
2. Based on your research, determine any stocks of Blue Chip companies you have selected.
3. After that you can invest a certain amount every month through SIP in Zerodha's Kite App.
4. For which you have to go to Orders and click on> SIP and> Create New SIP.
5. You can create a maximum of 20 SIPs, schedule investments, and also invest, withdraw and transfer in a systematic way.
6. After this, you can keep a close watch on your purchased stock and sell it after getting the prescribed profit.
(Note: - We never advise you to invest by seeking a loan or borrowing from other people, because the stock market is a business where both profit and loss are very likely.)
Blue Chip Stocks Vs Penny Stocks
Now, understand what is the difference between blue-chip stocks and penny stocks -
Blue Chip Stocks - It is a reliable and popular company, whose market cap is very large and their financial data is also very good. You can see them as one of the highly-rated brands in a market that offers a stable return. Big investors prefer blue-chip stocks for Intraday Trading and Long Term Investment.
Penny Stocks - Based on the market price, these are very small companies, which have a lot of potential for growth. But along with that, they have very high volatility due to which they are high Risky, in which all the money invested can also be drowned. Retail investors mainly show their interest in it.
Thus we learned what are Blue Chip Stocks and what are the reasons why Blue Chip Stocks are considered to be the first choice of big investors.
I hope this post helped you in understanding blue-chip companies. In the Comment box, you must tell which company you are thinking of investing in or which stock you have invested in.
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