In this blog, we shall talk about blue chip stocks. Know how you can add these stocks to your portfolio.
What Are Blue Chip Stocks?
Blue chip stocks refer to shares of financially stable companies with a long history of reliable performance and stable earnings. They are known by their ability to deliver consistent dividends to their shareholders. Blue chip stocks are typically considered to have comparatively lower risk due to their stability and solid financial standing.
These are also known as large cap stocks. Such stocks are shares of companies whose market cap is over ₹20,000 crore. In the context of SEBI’s classification, large cap companies are the top 100 companies in terms of their free-float market capitalisation. Large cap stocks are often a part of broad market indices such as Nifty and Sensex.
Why Are They Called Blue Chip Stocks?
Blue chip stocks are so-called as the term “blue chip” originates from the game of poker, where blue chips have the highest value. Blue chip companies are large, well-established and financially sound organisations that are considered to be some of the most reliable and stable investments on the stock market. These companies typically have a long history of profitability and strong brand recognition. The term “blue chip” signifies the high quality and dependability of these stocks.
Top 15 Blue Chip Stocks
These are the top 15 large cap or blue chip stocks ranked as per their market capitalisation:
| Company name | NSE Symbol | NSE Share Price (₹) | Total Market Cap (₹ in cr.) |
| Reliance Industries Ltd. | RELIANCE | 3,180.55 | 21,40,703.66 |
| Tata Consultancy Services Ltd. | TCS | 3,985.50 | 14,16,481.26 |
| HDFC Bank Ltd. | HDFCBANK | 1,636.50 | 12,39,134.88 |
| ICICI Bank Ltd. | ICICIBANK | 1,248.25 | 8,74,030.82 |
| Bharti Airtel Ltd. | BHARTIARTL | 1,435.55 | 8,22,507.65 |
| State Bank Of India | SBIN | 861.3 | 7,58,636.64 |
| Infosys Ltd. | INFY | 1,657.15 | 6,83,008.68 |
| Life Insurance Corporation Of India | LICI | 1,032.35 | 6,62,828.13 |
| Hindustan Unilever Ltd. | HINDUNILVR | 2,590.15 | 6,11,598.61 |
| ITC Ltd. | ITC | 452.6 | 5,62,393.09 |
| Larsen & Toubro Ltd. | LT | 3,666.10 | 5,01,819.56 |
| Bajaj Finance Ltd. | BAJFINANCE | 7,068.05 | 4,36,082.91 |
| HCL Technologies Ltd. | HCLTECH | 1,531.10 | 4,08,705.10 |
| Maruti Suzuki India Ltd. | MARUTI | 12,827.70 | 4,01,814.35 |
| Sun Pharmaceutical Industries Ltd. | SUNPHARMA | 1,585.40 | 3,83,065.82 |
Source: NSE data as of 9 July 2024
What Are Large Cap Indices?
The large cap indices are stock market indices that track the performance of large cap companies. Indices such as S&P BSE Sensex, BSE 100, Nifty 50 and Nifty Next 50 are some of the large cap indices in India, designed to represent the top companies also known as the blue chip companies. It includes well-established companies across various sectors.
These indices provide a snapshot of the overall performance of the Indian stock market. They are calculated using the free-float market capitalisation methodology, which means that only the shares available for trading in the market are considered for the index calculation, excluding locked-in shares held by promoters or governments.
What Are Some Of The Major Large Cap Indices In BSE?
Some of the major large cap indices in BSE are BSE Sensex, BSE Sensex 50, BSE Sensex Next 50 and BSE 100.
What Is The Difference Between BSE Sensex, BSE Sensex 50 and BSE Sensex Next 50?
The BSE Sensex, also known as the Bombay Stock Exchange Sensitive Index, is the benchmark index of the Bombay Stock Exchange (BSE) in India. It comprises the top 30 actively traded stocks from various sectors listed on the BSE. The BSE Sensex 50 consists of 50 of the largest and most actively traded stocks on the BSE. Meanwhile, BSE Sensex Next 50 represents the top 50 companies by free-float market capitalisation on the BSE after the top 50 companies included in the BSE Sensex index.
Top 5 Mutual Funds Tracking The BSE 100
Here are the top mutual funds that follow the BSE 100 as per their 3-year returns:
| Large Cap Funds | AUM | 1Y Returns | 3Y Returns | TER |
| Nippon India Large Cap Growth Direct Plan | ₹29,534 cr | 41.75% | 26.48% | 0.74% |
| JM Large Cap Growth Direct Plan | ₹192 cr | 48.21% | 23.66% | 1.01% |
| Bandhan Large Cap Growth Direct Plan | ₹1,393 cr | 38.11% | 20.23% | 0.92% |
| Taurus Largecap Equity Growth Direct Plan | ₹46 cr | 41.15% | 18.15% | 2.51% |
| Canara Robeco Bluechip Equity Growth Direct Plan | ₹13,933 cr | 33.35% | 18.07% | 0.46% |
Source: AMFI data as of 9 July 2024
*AUM is Assets Under Management
^TER is Total Expense Ratio
What Are Some Of The Major Large Cap Indices In NSE?
Some of the major large cap indices in NSE are Nifty 50, Nifty Next 50, Nifty Alpha 50 and Nifty 100.
What Is The Difference Between Nifty 50, Nifty Next 50 and Nifty Alpha 50?
The Nifty 50 represents a diversified basket of 50 top Indian companies from 13 sectors of the economy. It is used for various purposes such as benchmarking fund portfolios, index funds and index-based derivatives.
The Nifty Next 50 Index, on the other hand, consists of 50 companies from the Nifty 100 index after excluding the Nifty 50 companies. It is designed to capture the performance of the ‘Next 50’ blue-chip companies in the large cap segment.
Nifty Alpha 50 is an index that tracks the performance of 50 stocks with high alphas. The weights of securities in the index are assigned based on their alpha values. Alpha is how much an investment has outperformed compared to its benchmark index. The company with the highest alpha in the index is assigned the highest weight. It essentially aims to represent the performance of stocks exhibiting high alphas over the specified period within the Indian stock market.
Top 5 Mutual Funds Tracking The Nifty 100
Here are the mutual funds that follow the Nifty 100 as per their 3-year returns:
| Large Cap Funds | AUM | 1Y Returns | 3Y Returns | TER |
| ICICI Prudential Bluechip Growth Direct Plan | ₹55,459 cr | 40.40% | 22.75% | 0.90% |
| HDFC Top 100 Growth Direct Plan | ₹33,488 cr | 36.63% | 22.40% | 1.04% |
| Baroda BNP Paribas Large Cap Growth Direct Plan | ₹1,966 cr | 44.18% | 21.92% | 0.89% |
| Invesco India Largecap Growth Direct Plan | ₹1,146 cr | 39.83% | 21.16% | 0.76% |
| Edelweiss Large Cap Growth Direct Plan | ₹896 cr | 35.40% | 20.48% | 0.65% |
Source: AMFI data as of 9 July 2024
Start investing in Index Funds.
Top Index Funds Following Nifty Next 50
Here are the top index funds following the Nifty Next 50 Index as per their AUMs:
| Index Funds | AUM | 1Y Returns | 3Y Returns | TER |
| ICICI Prudential Nifty Next 50 Index Growth Direct Plan | ₹5,284 cr | 67.02% | 24.17% | 0.30% |
| UTI Nifty Next 50 Index Growth Direct Plan | ₹4,360 cr | 66.97% | 24.17% | 0.34% |
| SBI Nifty Next 50 Index Growth Direct Plan | ₹922 cr | 67.07% | 24.22% | 0.33% |
| DSP Nifty Next 50 Index Growth Direct Plan | ₹614 cr | 67.00% | 24.30% | 0.30% |
| Edelweiss Nifty Next 50 Index Growth Direct Plan | ₹43 cr | 66.97% | N.A. | 0.09% |
Source: AMFI data as of 9 July 2024
Top Index Funds Following Large Cap Indices
Here are the top index funds following large cap indices other than the Nifty Next 50 as per their AUMs:
| Index Funds | AUM | 1Y Returns | 3Y Returns | TER | Benchmark |
| Nippon India Nifty 50 Value 20 Index Growth Direct Plan | ₹657 cr | 36.58% | 20.89% | 0.25% | NIFTY 50 Value 20 Total Return Index |
| HDFC Nifty 100 Equal Weight Index Growth Direct Plan | ₹192 cr | 48.57% | N.A. | 0.40% | NIFTY 100 Equal Weighted Total Return Index |
| Sundaram Nifty 100 Equal Weight Growth Direct Plan | ₹79 cr | 47.70% | 21.14% | 0.57% | NIFTY 100 Equal Weighted Total Return Index |
Source: AMFI data as of 9 July 2024
What Are The Benefits Of Investing In Blue Chip Stocks?
You can start investing in mutual funds and index funds that track large cap indices for many reasons. Here are some of the reasons why you include them in your investment portfolio:
1/ Stable And Established Companies: Blue chip stocks are issued by well-established and financially sound companies in the market.
2/ Dividend Payments: Many blue chip stocks pay regular dividends to their shareholders. So, they can provide a steady source of income.
3/ Market Dominance: Since blue chip companies often hold dominant positions in their industries or sectors, they are less vulnerable to market fluctuations.
4/ Lower Risk: Blue chip stocks are generally considered to have lower risk compared to smaller or newer companies due to their strong financial position.
5/ Long Term Growth: While not as volatile as some other types of stocks, blue chip stocks can provide a long term growth potential.
What Are The Risks Associated With Blue Chip Stocks?
It is crucial to know the risks of investing in small cap funds as well. Here are some of the things that you must remember before including them in your investment portfolio:
1/ Slow Growth Rate: Blue chip stocks typically have a lower growth rate compared to smaller companies. This means that you may need to be patient to see significant returns on your investment.
2/ Market Fluctuations: While blue chip stocks are often stable, they are still subject to market fluctuations. Economic downturns or market volatility can impact the stock prices of even the most established companies.
3/ Lower Dividend Yields: Due to their stable nature, blue chip stocks may provide lower dividend yields compared to other investments. Investors seeking higher dividend income may find other types of investments more suitable.
4/ Concentration Risk: Investing heavily in a few blue chip stocks can lead to concentration risk. If one of the blue chip companies underperforms, it can have a significant impact on the overall investment portfolio.
How Can I Start Investing In Blue Chip Stocks?
To start investing in mutual funds that capture the market segment of the large cap companies, follow these steps:
Step 1: Open an account on Kuvera if you haven’t signed up.
Step 2: Click on “Invest”, then choose “Mutual Funds”.
Step 3: In the category filter, choose “Equity”, then “Large Cap Funds” as the sub category.
Step 4: Now you can sort large cap funds as per their returns or total expense ratio.
Interested in how we think about the markets?
Read more: Zen And The Art Of Investing
Watch here: Expert Insights for Smart Investing
Start investing through a platform that brings goal planning and investing to your fingertips. Visit kuvera.in to discover Direct Plans and Fixed Deposits and start investing today.
AREVUK Advisory Services Pvt Ltd | SEBI Registration No. INA200005166
DISCLAIMER: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. The securities quoted are for illustration only and are not recommendatory.
