How did the word "Blue Chip" originate?
As befits the sometimes high-risk nature of stock picking, "blue chip" term derives from the game of poker. The simplest sets of poker betting discs include white, red, and blue chips, with tradition dictating that the blues are highest in value. If a white chip is worth $1, a red is usually worth $5, and a blue $25.
What are Blue Chip companies?
According to the New York Stock Exchange, a blue chip is stock in a corporation with a national reputation for quality, reliability, and the ability to operate profitably in good times and bad. They usually pay good dividends also, since dividends bring stability to returns in bad times. In India, Blue Chip companies are the companies which constitute the BSE Sensex(30 companies) and NSE Index (50 companies)
Guidelines to select Blue Chips in India
SENSEX consists of 30 top scrips from different sectors. BSE has some strict guidelines to select scrip into SENSEX. Scrip Selection Criteria for Sensex are
Which are the Top 30 Blue Chip Companies in India
As on August 2013, these were the Top 30 Blue Chip companies that formed the Sensex. Depending on various factors as listed above, there are companies that can move into the list, and some which can move out of the list.
So, if you are looking for companies that are stable, give you decent capital appreciation, pay good dividends, and you are ready to invest for long term, these are the first set of companies that you should look out for.
- Listed history – Listing history of at least 3 months at BSE, preferably more than one year
- Trading frequency – Should trade each and every trading day
- Final rank - The scrip should figure in the top 100 companies listed by final rank. The final rank is arrived at by assigning 75% weight age to the rank on the basis of three-month average full market capitalization and 25% weight age to the liquidity rank based on three-month average daily turnover & three-month average impact cost.
- Market Capitalization - The weight age of each scrip in SENSEX based on three-month average free-float market capitalization should be at least 0.5% of the Index. These are typically Large Cap stocks.
- Industry/Sector Representation: Scrip selection would generally take into account a balanced representation of the listed companies in the universe of BSE. The company should also be a leader in its own industry segment.
- Track Record: In the opinion of the BSE Index Committee, the company should have an acceptable track record.
Which are the Top 30 Blue Chip Companies in India
As on August 2013, these were the Top 30 Blue Chip companies that formed the Sensex. Depending on various factors as listed above, there are companies that can move into the list, and some which can move out of the list.
| No. | Company | Industry |
| 1 | Bajaj Auto Ltd | Automobile Two & Three Wheelers |
| 2 | Bharat Heavy Electricals Ltd. | Electric Equipment |
| 3 | Bharti Airtel Ltd. | Telecommunication - Service Provider |
| 4 | Cipla Ltd. | Pharmaceuticals & Drugs |
| 5 | Coal India Ltd. | Mining & Minerals |
| 6 | Dr Reddys Laboratories Ltd. | Pharmaceuticals & Drugs |
| 7 | GAIL (India) Ltd. | Gas Transmission/Marketing |
| 8 | HDFC Bank Ltd. | Bank - Private |
| 9 | Hero MotoCorp Ltd. | Automobile Two & Three Wheelers |
| 10 | Hindalco Industries Ltd. | Aluminium & Aluminium Products |
| 11 | Hindustan Unilever Ltd. | Household & Personal Products |
| 12 | Housing Development Finance Corporation Ltd. | Finance - Housing |
| 13 | ICICI Bank Ltd. | Bank - Private |
| 14 | Infosys Ltd. | IT - Software |
| 15 | ITC Ltd. | Cigarettes/Tobacco |
| 16 | Jindal Steel & Power Ltd. | Steel/Sponge Iron/Pig Iron |
| 17 | Larsen & Toubro Ltd. | Engineering - Construction |
| 18 | Mahindra & Mahindra Ltd. | Automobiles-Tractors |
| 19 | Maruti Suzuki India Ltd. | Automobiles - Passenger Cars |
| 20 | NTPC Ltd. | Power Generation/Distribution |
| 21 | Oil & Natural Gas Corpn. Ltd. | Oil Exploration |
| 22 | Reliance Industries Ltd. | Refineries |
| 23 | Sesa Goa Ltd. | Mining & Minerals |
| 24 | State Bank Of India | Bank - Public |
| 25 | Sun Pharmaceutical Inds. Ltd. | Pharmaceuticals & Drugs |
| 26 | Tata Consultancy Services Ltd. | IT - Software |
| 27 | Tata Motors Ltd. | Automobiles-Trucks/Lcv |
| 28 | Tata Power Company Ltd. | Power Generation/Distribution |
| 29 | Tata Steel Ltd. | Steel/Sponge Iron/Pig Iron |
| 30 | Wipro Ltd. | IT - Software |
So, if you are looking for companies that are stable, give you decent capital appreciation, pay good dividends, and you are ready to invest for long term, these are the first set of companies that you should look out for.
Cheers
Manoj Arora
Lead a Financially Free Life !!
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Stock market is the best online business. Even in commodities one can earn a lot. Their are many Mcx tips provider which can give huge profits.
ReplyDeleteThank you Sir !
ReplyDeleteVery good info for investors.. I started to invest in MF for the past 8 months...now i am going to look stocks for my Portfolio ! Those 30 are looks good, but what is the best time to purchase the stocks ? should i continuously monitoring the price and buy when its come down ?
Please advise me !
-Siva
Chennai.
Hey Siva ! We are launching the simplest book ever on Stock Markets this year. I suggest you wait for that before you start putting in any money here. Until then, suggest stay with Mutual Funds.
DeleteCheers my friend
Manoj