Blue Chips (Stock Market)

The blue chips that we are talking about today aren’t the ones that are the chips which you eat which are blue in color or the chips which are usually circular disks made out of metal ,plastic or clay used to represent money in Casinos usually considered currency which can be traded for money.However that’s not the blue chips we are going to talk about today.

The blue chips that we are discussing today are large,well-established and financially sound companies that have operated for many years and are usually the leaders in their respective sectors.In other words they are those stocks that are quite high on the prices due to public confidence about their performance. They are usually called blue-chip companies and their stocks are called blue chip stocks,the name is actually derived from game of poker where in which the chip of highest value is called a blue chips.

These are those companies which are expected to do well even in the most adverse of the economic conditions.These companies usually have the best market value,growth prospects and market capitalization.These companies are well established and mature therefore the prices are quite high and usually pay good rate of dividend that increases on an year to year basis.Investors who are ready to take up some risk with the stock prices and regular returns in terms of cash usually prefer to hold blue chips .

They aren’t immune from adverse economic conditions they are the ones that recover quite fast how.While a blue-chip company may have survived several challenges and market cycles over the course of its life but that might not always be the case. The bankruptcy of General Motors and Lehman Brothers and many other leading European banks during the global recession of 2008, is proof that even the best companies may sometimes be unable to survive during periods of extreme stress.

In India,the Stock index such as Bombay Stock Exchange SENSEX and National Stock Exchange NIFTY usually represent the blue chips.The Dow Jones India Titans 30 Index includes 30 largest and most liquid stocks traded in India. Companies such as Infosys Technologies Ltd.,Reliance Industries Ltd.Bharti Airtel Ltd.,Housing Development Finance Corp. Ltd.,ITC Ltd.,Larsen & Toubro Ltd.,ICICI Bank Ltd.,State Bank of India,Oil & Natural Gas Corp. Ltd. ,Bharat Heavy Electricals Ltd.The selection to the index is based on rankings by float-adjusted market capitalization and 12 month average daily trading volume. In the US, Dow Jones Industrial Average and Standard& Poor 500 usually represent them.

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