While the current market seems to be highly volatile, we can’t expect traders/investors to be on the optimistic side, some are panicking, and some are wondering if they have lost the knack for the stock market and a lot more things. What we expect from the market is always an inclination toward what is happening in the economy, domestic & globally. We will discuss the top blue chip stocks in India in this article.
First, let’s talk about the top blue chip companies in india. These companies are the ones that are financially & fundamentally sound and have an enormous market capitalization. Blue-chip companies include the ones that are successfully running operations and hold a substantial market reputation in a long run. Another plus of blue-chip companies is their product & services are of a wide variety and offer value to a large count of audiences which makes them the least affected by the downturns of the economy.
The term “Blue-Chip” comes from the family of Poker, where blue chips are more valuable than others so named after Blue Chip companies. Top blue chip stocks are the ones offered by such companies and found to be more valuable than the mid & small-cap stocks in the market. Here in the blog, we’ll unveil more about the blue chip stocks in detail.
- Attributes of Top Blue Chip Stocks in India
- List of Top Blue Chip Stocks in India
- Investment in Top Blue Chip Stocks/Funds
- Parameters to Decide the Top Blue Chip Stocks in India –
- The Wrap-Up!
Attributes of Top Blue Chip Stocks in India
There are certain features that define blue-chip stocks and make them stand out from the rest, let’s go through them one by one.
- Market Capitalization – The blue chip companies hold a higher market cap and have a good reputation in their industry and the stock market as well. So, investing in top blue chip stocks in India is always a better idea. Some of India’s leading blue chip firms are Reliance, GAIL, Infosys, Coal India, ITC, etc.
- Steady Returns – A history of establishment and consistent growth signifies the background of a firm. Being a blue-chip company is a direct indication of both things, thus managing to deliver steady returns on time is expected from them. Also, the performance of these firms is not affected by the slump in the economies.
- Low-risk – The least risk & volatility are generally expected from blue chip stocks. When investors will go for long-term investments, blue-chip stocks are highly recommended to grow their wealth and earn profits out of it.
- Diversified Portfolio – Investing in blue-chip firms is also beneficial as it will make your portfolio diversified. Even if you’re losing on any end you can save on the other side. The reason is the blue-chip firm’s main line of business is not just one but many which gives the scope to the stock to not fall off. A diversified portfolio is the best portfolio.
List of Top Blue Chip Stocks in India
India has more than 30 blue chip stocks currently in the market which gives the investors an idea of how well they can grow their corpus. Here is the list of the top 10 blue chip stocks in India in 2022-
|CMP (July 1)
|Reliance Industries Ltd.
|Tata Consultancy Services Ltd.
|Hindustan Unilever Ltd.
|Bharti Airtel Ltd.
|Asian Paints Ltd.
|Nestle India Ltd.
|HCL Technologies Ltd.
Reliance Industries Ltd.
Being India’s multinational conglomerate, Reliance Industries is the biggest of all the companies and the top blue chip stocks in India with headquarters in Mumbai, Maharashtra. The company has diversified business inclusive of energy, petrochemicals, retail, telecom, textile and mass media. With successive growth, soon the company will be seen in the new energy business where it is going to invest ₹75,000 crores as per the news from certified sources. The share of RIL is an effective one to hold for a long period of time.
Tata Consultancy Services Ltd.
World’s largest IT service provider & India’s top tech company with the largest market cap. Business consulting, IT services, digital transformation and tech solutions & software generation are some of the core areas where TCS works. With a 5-year average ROE of 37.2%, the company has shown tremendous performance all the time.
Hindustan Unilever Ltd.
80 years of business and one of the finest FMCG in India is what HUL is- one of the top blue chip stocks in India. The company’s annual turnover is ₹2000 crores each from its 5 brands and another ₹1000 crores turnover from each of its 7 other brands. Hindustan Unilever deals in distinct products from food, beverages, personal care, etc. Its strong distribution network and robust advertising have nailed the consumers and moulded their taste toward the brand.
Another best blue-chip stock on the list is Infosys Ltd. The company is the next generation’s best digital service and consulting firm with bandwidth in more than 50 countries and growing consistently. The core business of Infosys revolves around software development, validation services, etc. to different businesses like finance, insurance, manufacturing, and more. The net profit of Infosys rose by 14.3% in FY22 from the previous year.
Housing Development Finance Corporation Ltd. (HDFC) has a strong distribution network with branches established in 675 locations and is the market leader in India’s housing financing sector. HDFC is renowned for its long history of operations, adequate capitalization, robust capacity for expanding resources, rigorous underwriting standards, risk management practices, and sound asset quality. Being the top blue-chip stock, the company has recently announced its merger with HDFC Bank where HDFC Ltd. will obtain 41% of HDFC Bank.
Bharti Airtel Ltd.
The leading and most trusted brand in the telecom industry is Bharti Airtel. With a sound customer base in both, the domestic and international markets the company is great in its services like voice & messaging, data centre, IoT, Enterprise mobility, data connectivity, etc. The company has a family of more than two billion people across the globe and comes in the top three telecom service providers in the world.
Indian Tobacco Company (ITC) is another big conglomerate on the list of top blue chip stocks in India. The company was incorporated in the year 1910 and has a base of diversified businesses including FMCG, Hotels, Agriculture, IT & Paperboards. The well-known business brands of ITC include Gold Flake, Aashirvaad, Sunfeast, Bingo, Classmate, etc.
Asian Paints Ltd.
Undoubtedly, Asian Paints is the leader with over 50% domestic paint market share by its side. Not only in the decorative paints market, but the company has also established itself fairly in the automotive industry for its quality of paints. Its growth parameters are very simple and compact to have- the right distribution network, large portfolio of products and brand value that is making it number one in the market.
Nestle India Ltd.
The largest food and beverage corporation in the world, Nestle SA of Switzerland, is the parent company of Nestle India. It was incorporated in 1956 and now it comes in the best blue-chip stocks in India. Nestle India Ltd. has 4 branch offices and 8 manufacturing units in India. In order to provide Taste, Nutrition, Health, and Wellness through its product, the company focuses on understanding the changing Indian lifestyles and anticipating consumer needs perfectly. The well-knowns of Nestle are Maggi, Kitkat, Alpino, etc.
HCL Technologies Ltd.
Four decades of research & innovation made it possible for HCL to be of the top firms in India when it comes to investing. The company clearly differentiates itself and has a distinct advantage in generating value for businesses in the digital and connected world. Thanks to its DNA of grassroots innovation, the ingrained culture of co-innovation, and tradition of going above and beyond what is expected to create customer value. Its revenue stood at a 13.4% high from the previous year in FY22.
Investment in Top Blue Chip Stocks/Funds
The next big thing is deciding on how to invest in top blue chip stocks in India. There can be two ways, one by directly investing in the company’s stock and the second can be investing through mutual funds. For the first option, the trader needs to do thorough research on these stocks and depending upon their potential to invest should decide on the subject. The second is when you want to invest through mutual funds, so select some growth perspective mutual funds and invest accordingly.
Before doing any of these things, the trader has to open a Demat account with a brokerage firm and through that, you can deal in stocks, MFs, commodities, F&O etc. Additionally, deciding your investing capacity also depicts your investment volume. A blue-chip stock is a kind of a stock or fund where anyone can invest, the new trader, the experienced one or the one who is looking forward to good returns. Ideally, hold your stocks for 7 to 10 years and see how incredible they will grow. These stocks are mostly less risky and steady to invest in.
Parameters to Decide the Top Blue Chip Stocks in India –
There are certain things that are required for the investor to look at before investing in any stock, as said ‘do thorough research!’ Just a high dividend or renowned company cannot work when it comes to investment. Check on the below-mentioned parameters and see if your preferred stock will work for you.
- DE Ratio: Businesses with high debt-to-equity ratios are riskier than those with lower debt-to-equity ratios. A lower debt-to-equity ratio signifies low debts via lenders and funding is done through shareholder’s equity.
- Robust Financials: Investors should at least review the financials over the last five to ten years. For instance, there should be a constant rise in sales revenue, EBITDA (earnings before interest, taxes, depreciation, and amortization), ROE, cash flow operations, earnings per share, etc. This will help in doing the analysis better and more certain about the future performance.
- Analysis: Both, fundamental & technical analysis are crucial to be seen before pouring your money anywhere. Look for your risk appetite when you dealt with market downturns and go for the blue-chip stocks which played sound at that time as well.
- Market Cap: When evaluating high-quality blue-chip stocks, market capitalization seems to be a significant signal for investing, and businesses with a high market capitalization are considered more favourable than businesses with low capitalization. It can be calculated by multiplying the total number of a company’s outstanding shares by the CMP of one share.
- Intrinsic Value: When choosing blue-chip stocks, wise investors take into account both the market capitalization and the intrinsic value because the market capitalization is based on supply and demand and does not reflect a business’s true net worth. Intrinsic value reveals the actual worth of a company. It is seen as overpriced if the intrinsic value exceeds the price of the company’s shares, and as undervalued if it falls below the price.
Investing in the stock market and mutual funds is always subject to market risk, so it is suggested to look for a few things and then invest. Do not just follow any tip or someone’s call in order to make profits. Generating profits or exiting the stock market with minimized losses, all come in with experience and regular analysis.
Try and eliminate the stocks which seem to be poor for your long-term investment or are affected by the economic movements frequently. Top Blue chip stocks in India are less risky and give good returns in a long run but invest wisely in them. Always understand your risk-taking capacity and then invest, just as you’re in red in the stock market does not ask you to pour in more money, have an exit at breakeven or at minimum loss. Have your budget, divide & distribute it amongst stocks of different industries and here you go!
Happy Investing, Wisely!
Note – Also Read about the top EV Stocks in India