For those who are new to the world of investing, Emerging Blue-chip stocks are essentially mid-cap stocks which are essentially nothing but a portfolio of stocks that are not included in the top 100 companies of India. They actually fall under the bracket of the next 150 stocks where the market capitalisation of companies generally ranges between 50 billion INR and 200 billion INR.
The term ‘blue chip’ stock comes from the world of poker, where the chips used in gambling have different colours that represent different amounts of dollars. A blue chip in poker is generally the one with the highest value of all, surpassing white chips as well as red chips.
Investors usually wish to put their money into a company that has been profitable for decades simply because consistency is a reassuring factor in the financial world. Blue-chip stocks are considered great because they have the potential to produce returns in both – bullish and bearish markets.
Blue-chips also have a high return on equity, a high-interest coverage ratio, and a low price to revenue ratio.
The titans of sectors are the Blue chip stocks. Industry defining companies that are well established, well-known, well-capitalised, long term stable plays with solid financial prospects.
Even though blue chips are considered as appropriate for use as core holdings within a larger portfolio, it is not advisable to make it an entire portfolio. A diversified portfolio usually contains some allocation to bonds and cash. Within a portfolio’s allocation of stocks, the investor should also consider owning mid-caps and small-caps as well.
Younger investors can generally tolerate the risk that comes from having a greater part of their portfolio in stocks, which includes blue chips, while older investors may choose to focus more on capital preservation by larger investments in bonds and cash.
The excellent market valuation, strong financial standing and credit-worthiness of blue-chip stocks act in favour of their investors and extends multiple benefits to them
- Stable and regular dividends
- Opportunity to achieve financial goals
- An advantage to portfolio diversification
|Larsen and Toubro
|Construction and Engineering
|Mining and Minerals
In the end, it is all about your market analysis and markets, as you know, as fluid as ever. While these are some of the top blue-chips in India, there are many more out there that did not make it to this list but are not any less than the ones mentioned. While you invest in Emerging Blue Chips, your market analysis, your foresight and your gut instinct also matter.