Blue Chip Stocks - Indian Economy 

Blue Chip Stocks - Indian Economy 

Introduction

Blue-chip stocks are the shares of very large, well-recognized companies with a lengthy history of sound financial performance. These equities are valued for their capacity to endure challenging market circumstances while also generating significant profits during favorable market conditions. Since they have a stellar reputation and are typically market leaders in their industries, blue chip stocks are expensive. 
 

What Do Blue-Chip Businesses Do?

•    A blue-chip business is one that enjoys a widespread reputation for excellence, dependability, and profitability in both favorable and unfavorable economic conditions.
 
•    These companies have a solid track record of managing their finances and generating revenues while taking on relatively little debt.
 
•    These companies are regarded as stable because they have been around for a while.
 
•    Blue Chip examples include: Bharti Airtel Ltd., BPCL, Dr. Reddy, HDFC, Reliance Industries Ltd., Infosys Technologies Ltd., and ICICI Bank Ltd. are examples of blue-chip businesses. 
 
Blue Chip Stocks - Indian Economy

Features Of Blue Chip

The characteristics of these businesses are as follows:
•    Blue-chip stocks offer assured returns in the form of dividends, which are distributed on a quarterly basis. The reality that for the majority of investors, well-established businesses represent a secure investment opportunity.
 
•    Creditworthiness: Blue-chip companies have enough cash on hand to quickly pay their debts. As a result, the shares issued by these companies are highly creditworthy.
 
•    Risk: Compared to other kinds of equities, blue-chip stocks have a reduced risk factor.
 
•    Investment horizon: The majority of investments are undertaken over a seven-year or longer time frame. Blue-chip stocks are excellent for achieving long-term financial objectives due to their long investment horizon.
 
•    Growth Prospect: Blue-chip companies are significant businesses that have maximized their capacity for growth. The blue-chip stocks in India, which have been rising over time, are affected by this.
 
•    Taxation: Section 80 C of the Income Tax Act in India requires earnings from blue-chip stocks to be reported as income.
 

Importance

•    Because they frequently offer consistent returns, blue chip stocks are regarded as reliable long-term investments. Higher stock prices and lower yields typically offset this perceived lessened risk.
 
•    By purchasing their shares, investors can make direct investments in well-known corporations.
 
•    Investors can also choose from a variety of blue-chip equities through derivative blue chip products.
 
•    A kind of diamond are blue chip instruments, often known as exchange-traded securities. 
 

Conclusion

A blue-chip business is one that is well-known, stable, and established. Because they have a history of success and steady growth, blue-chip corporations are seen as safer investments. However, as the collapse of Lehman Brothers and the effects of the financial crisis on General Motors show, blue-chip stocks are nonetheless susceptible to market instability and failure.

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