{"id":348,"date":"2020-03-30T12:59:45","date_gmt":"2020-03-30T12:59:45","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=348"},"modified":"2020-03-30T13:10:12","modified_gmt":"2020-03-30T13:10:12","slug":"influence-of-blue-chip-companies-in-stock-market","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/influence-of-blue-chip-companies-in-stock-market\/","title":{"rendered":"Influence of Blue-Chip Companies in Stock Market"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>\u2018Feeling blue\u2019 may not work for you very well! But, feeling blue works with the stocks of blue-chip companies which are well-established and financially stable; recognized for stable stocks for making investments. The Indian stock market has over thousands of listed companies in the stock market but most of them are average performers and do not fit in the criteria of blue-chip companies. As a result, these companies are not much of influencer in the stock market. But, that\u2019s not the case with blue-chip companies. Blue-chip companies are strong and stable enough to influence the stock market itself. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list\"><li><a href=\"#What_are_the_Blue-Chip_Companies\" title=\"What are the Blue-Chip Companies?\">What are the Blue-Chip Companies?<\/a><ul><li><a href=\"#How_to_Identify_a_Blue-Chip_Company_in_Stock_Market\" title=\"How to Identify a Blue-Chip Company in Stock Market? \">How to Identify a Blue-Chip Company in Stock Market? <\/a><\/li><\/ul><\/li><li><a href=\"#Influence_of_Blue-Chip_Companies_in_Stock_Market_Movement\" title=\"Influence of Blue-Chip Companies in Stock Market Movement\">Influence of Blue-Chip Companies in Stock Market Movement<\/a><ul><li><a href=\"#Final_Thoughts\" title=\"Final Thoughts: - \">Final Thoughts: - <\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<p>Let\u2019s take a look to understand\nhow blue-chip companies affect the market movement and come out as one of the\ninfluencers of the stock market. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the Blue-Chip Companies?<\/h2>\n\n\n\n<p>First, you need to know: <em>where the \u2018Blue-chip\u2019 term comes from?<\/em> &#8211;\nWell, it is a term took from the game of poker. \u2018Blue-chip\u2019 is the name given\nto the highest valued chips amongst all chips used in Poker. <\/p>\n\n\n\n<p>But, <strong><a href=\"https:\/\/www.invest19.com\/blog\/how-safe-is-it-to-invest-in-blue-chip-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"blue-chip stocks  (opens in a new tab)\">blue-chip stocks <\/a><\/strong>don\u2019t necessarily refer to the high-priced stocks, but more precisely the stocks of well-reputable, well-established, large and financially sound companies that generally sell or offer widely acceptable, high-end quality products or services. These blue-chip companies have proven track record of performing well in the face of adverse economic conditions and downward trends in the stock market. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How to Identify a Blue-Chip Company in Stock Market? <\/h3>\n\n\n\n<p>Okay! A company that is\nwell-reputable, well-established, large\u2026we get it! But, <em>how big that company should be to call the big-chip company is still\nopen for debate?<\/em> <\/p>\n\n\n\n<p>And, <em>how do you find one among other publically-traded companies?<\/em> <\/p>\n\n\n\n<p>Probably, such questions may be\ngoing around in your mind right now. Well, if yes, then you are right to think\nit that way. Because, until you know the answer to these questions, you won\u2019t\nget a clear picture of the effect of \u2018Blue-chip companies\u2019 on market movements.\n<\/p>\n\n\n\n<p>Now, back to the point!\nIdentifying blue-chip companies among thousands of listed companies on\nexchanges is not a simple task. But, as we defined the companies are\nwell-reputable and recognized for its widely acceptable products gives the hint\nthat the companies must have high market-capitalization. <\/p>\n\n\n\n<p>So, companies that have\nlarge-capitalization such as TCS, Reliance Industries, HDFC Bank, Hindustan\nUnilever, Infosys, Kotak Mahindra, Bharti Airtel, ICICI Bank, ITC, etc. \u2013 are the\nobvious ones which are more close to being called blue-chip companies.<\/p>\n\n\n\n<p>Now, as we mentioned that the\nblue-chip companies are most financially-sound companies that mean these\ncompanies have very strong fundamentals and consistent growth over the years. There\nis no way, all large-cap companies are financially sound. To find those that\nare, filter out the financially-sound companies from the large-cap companies\nbased on Capital Annual Growth Rate (CAGR), debt-equity ratio, Return on\nCapital Employed (ROCE) and interest coverage ratio. <\/p>\n\n\n\n<p>It is also said that blue-chip\ncompanies have a long track record of performing well in the stock market and\nhave a history of giving consistent dividend payouts to their shareholders even\nin adverse economic situations. So, if a company is consistent with dividend\npayouts that means the company is profitable over the years and manage to\nperform well even in bad times. If you found a company one with all the above\nparameters in-checked then you have a blue-chip company in front of you. &nbsp;&nbsp;<\/p>\n\n\n\n<p>One more thing! The participation\nof DII and FII is a common blue-chip trait. So, while you\u2019re at it, it is important\nto check this one too. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Influence of Blue-Chip Companies in Stock Market Movement<\/h2>\n\n\n\n<p>To better understand the\ninfluence of blue-chip companies in the stock market movement, let\u2019s take an example\nof Nifty50. <\/p>\n\n\n\n<p>Nifty50 is the benchmark\nbroad-based index for the Indian equity market which usually refers to a group\nof 50 large-cap companies on the National Stock Exchange. These large-cap\ncompanies are often called by blue-chip companies which hold around50-60 per\ncent weightage in overall Indian market reserve and reflects overall market\nconditions heavily. <\/p>\n\n\n\n<p>Below, we\u2019ve mentioned the weightage\nof top constituents in the movement of the overall stock market. <\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  <strong>Stock\n  Name<\/strong>\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  <strong>Weightage\n  (in %)<\/strong>\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  HDFC Bank Ltd\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  10.70\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  Reliance Industries Ltd\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  9.51\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  Housing Development Finance Corporation\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  8.29\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  Infosys Ltd\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  6.89\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  ICICI Bank Ltd\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  5.88\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  Tata Consultancy Services Ltd.\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  5.28\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  ITC Ltd\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  4.69\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  Kotak Mahindra Bank Ltd\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  4.26\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  L&amp;T\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  3.65\n  <\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">\n  Axis Bank\n  <\/td><td class=\"has-text-align-center\" data-align=\"center\">\n  3.02\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Reference: <em>https:\/\/indiancompanies.in\/nifty-50-companies-stock-weightage-constituents\/<\/em><\/p>\n\n\n\n<p>As you can see in the above\ntable, these blue-chip companies hold very high weightage in the overall\nmovement of the equity market so any changes in a company\u2019s business &amp;\noperations can highly influence the overall market movement. If a company have\na good quarterly result then the individual stock can lift the overall\nsentiment of the market and vice-versa. <\/p>\n\n\n\n<p>And any bad news makes it capable\nof left the market in a downward trend. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Final Thoughts: &#8211; <\/strong><\/h3>\n\n\n\n<p>Undoubtedly, blue-chip companies\nare more than capable enough to influence the overall movement of the market. But,\nthe companies stability and consistent performance throughout the years made\nthem the first choice of investment to safeguard their capital from market volatility.\nIt has often seen that even in economic slowdowns, the blue-chip stocks are the\nfirst to recovered and lift the overall market sentiment. <\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 4,693<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"348\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">6    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>\u2018Feeling blue\u2019 may not work for you very well! But, feeling blue works with the stocks of blue-chip companies which are well-established and financially stable; [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/influence-of-blue-chip-companies-in-stock-market\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":351,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[81],"class_list":["post-348","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-market","tag-blue-chip-companies"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/348","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=348"}],"version-history":[{"count":1,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/348\/revisions"}],"predecessor-version":[{"id":350,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/348\/revisions\/350"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/351"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=348"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=348"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=348"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}