The Indian Stock Market has seen certain stocks performing in a consistent manner and reaching the pinnacle through the performance in their respective businesses. These types of stocks are called as blue chip stocks. In this resource, let us have a curtain raiser on some of the blue chip stocks in Indian Stock Market along with their advantages and disadvantages in business. In this resource, I shall discuss about the stocks of I.C.I.C.I. Bank, Mahindra & Mahindra, Pantaloon, Coal India, Jaypee Associates and T.C.S.
Curtain raiser on Indian blue chip stock: I.C.I.C.I. Bank
I.C.I.C.I. Bank is the leading private sector Bank in India. I.C.I.C.I. Bank has an administration, which can implement business ideas in lightening fast. I.C.I.C.I. Bank has got around 5000 bank branches in India & abroad. I.C.I.C.I. Bank has got a network of around 20000 A.T.M.s or Automated Teller Machines. The speed of the administration of I.C.I.C.I. Bank is sometimes considered a negative point for this Bank because in banking industry all the decisions cannot be implemented in a faster manner. I.C.I.C.I. Bank is rapidly growing in the retail loan sector. It is expected to grow in the same pace for the next five years. Taken by the surprise growth of I.C.I.C.I. Bank, now the public sector banks are also entered the foray of retail loan business with renewed vigor. The quality of service provided to the customers will decide the winners in the retail loan sector among the banks. At present, there is only a meager chance of new banks to enter in to the market. I.C.I.C.I. Bank has ample room for growth and it can utilize the opportunities well. Therefore, I.C.I.C.I. Bank is a good bet among the blue chip stocks in Indian Stock Market.
Advantages of holding I.C.I.C.I. Bank blue chip stock:
I.C.I.C.I. Bank has passed the growth focus and now entered in to profit focus. The income from the service charges for the services provided to corporate is really high for the I.C.I.C.I. Bank. There is a bright prospect for the service charges for the corporate continue to grow in future also. I.C.I.C.I. Bank has got the statutory Capital Adequacy Ratio more than the required amount prescribed in statute.
Disadvantages of holding I.C.I.C.I. Bank blue chip stock:
The winning strategy of the banking industry lies in the quality of loanee and the profit from the interest rates. If the quality of the loanee decreases then the interest the bank getting will increase. It involves lots of risk too and banks can shine only if they can take optimum risk. I.C.I.C.I. Bank is now struggling in this aspect and only time can tell whether it can come out from any such crisis.
Curtain raiser on Indian blue chip stock: Mahindra & Mahindra
Mahindra & Mahindra is a big company with great product portfolio viz., Tractor, Utility Vehicle, Light Commercial Vehicle and three Wheeler. Besides the above, Mahindra & Mahindra has invested in Software Industry, Hotel Industry, Real Estate Industry and Financial Services Industry. Mahindra & Mahindra has shown that it is a blue chip company against testing times.
Advantages of holding Mahindra & Mahindra blue chip stock:
Whenever you see farmers using their traditional equipments in the field, you can be assure that Mahindra & Mahindra company has got a great future. In India, for each 100 square Kilometers, we have less than 100 Tractors. When compared with nations like Malaysia and Thailand, which have 239 and 147 Tractors respectively, the Tractors we have is very much less. Therefore, Mahindra & Mahindra has still got great potential in the sale of Tractors. Mahindra & Mahindra has got 30% market shares in Tractors and 40% market shares in Utility Vehicle in Rural market. This is the biggest strength of Mahindra & Mahindra.
Disadvantages of holding Mahindra & Mahindra blue chip stock:
This company has to wait for its payments from dealers when the sale is dull or not picking up. For launching new products in the market, this company needs to enter agreements with foreign companies, which remains an uncertain factor for this company. If the agreement breaks like the agreement between Hero-Honda Company, then it becomes a greater issue for this company.
Curtain raiser on Indian blue chip stock: Pantaloon
Pantaloon is a bigger company, which can be named as the leader in retail industry. The sales value of Pantaloon is almost equal to the sum of the sales value of three companies next to Pantaloon in the market. The Indian retail sale has got only 8% of integrated sale like Pantaloon has and therefore, there is a big scope for Pantaloon to grow. The migrated population from rural areas to urban areas can surely help the growth of Pantaloon in future.
Advantages of holding Pantaloon blue chip stock:
Pantaloon has withdrawn its investments from other types of industries and started to concentrate only on retail industry. This is a big positive aspect. Since Pantaloon has entered in to agreement with many foreign concerns for the procurement of goods at much cheaper rates, it can stabilize itself in retail industry much easily.
Disadvantages of holding Pantaloon blue chip stock:
If the Government opens the retail sector for Foreign Direct Investments, the competition becomes tougher and it may have a say on the profits earned by Pantaloon.
Curtain raiser on Indian blue chip stock: Coal India
Coal India is the biggest Coal Company in India. Coal India governs around 471 mines in 21 places across India. Among these 21 places across India, only 5 places gives almost 65% income to Coal India. Coal India has acquired more coal reserve than any other company in the world.
Advantages of holding Coal India blue chip stock:
India is a country having electricity deficiency. The gap between the electricity requirement of the country and the production of electricity is always a widening one. Per capital electricity usage in India is much lesser than compared with rest of the world. Indian per capital electricity usage will only increase in future and there is no chance to decrease. The price of the Coal is determined based on the impurities in the Coal content and Coal India has decided to setup factories to clean the Coal and market the Coal with less impurities thus Coal India can get a higher price for the Coal marketed by them.
Disadvantages of holding Coal India blue chip stock:
The frequent changes in the environmental policies of Government are a hurdle for Coal India. Since the production of electricity based on Coal is subjected to much political pressure, the price of electricity could only be increased 5% once in a year. If such situation persists, Coal India may not get the expected profit. Another negative aspect for Coal India is that many terrorist organizations are operating in the mining areas of Coal India.
Curtain raiser on Indian blue chip stock: Jaypee Associates
Jaypee Associates is one of biggest basic construction companies in India. Jaypee Associates has proved itself by doubling its order book and cement capacity in the last 5 years.
Advantages of holding Jaypee Associates blue chip stock:
Jaypee Associates is known for its commitment in finishing the given orders and this will sure help them in getting more orders in future.
Disadvantages of holding Jaypee Associates blue chip stock:
For any reason, if the Infrastructure investments come down or if the interest rates become very much high, then there is every possibility that the interest earned by Jaypee Associates will also reduce to that much percentage.
Curtain raiser on Indian blue chip stock: TATA Consultancy Services or T.C.S.
TATA Consultancy Services or T.C.S. is one of the software giants in Asia. TATA Consultancy Services or T.C.S. provides services and solutions for the following sectors: Banking, Insurance, Financial Service, Manufacturing, Telecom and Retail.
Advantages of holding TATA Consultancy Services or T.C.S. blue chip stock:
The global demand for software industry is higher than the demand six months ago. The sub-prime bubble has virtually stopped the financial institutions from buying spurious software from smaller vendors. Therefore, the sub-prime issue has created a bigger market for big players like T.C.S. The risk for T.C.S. is minimal as its software business involves various sectors.
Disadvantages of holding TATA Consultancy Services or T.C.S. blue chip stock:
The software industry needs to have highly paid employees to run the business. Therefore, a small slump in the orders can also make or destabilize your business very easily. Such situations will lead to lesser profits. The income in software industry is mainly through foreign exchange and any issues in currency market is likely to test the profits of this industry / company.
You may wonder about the advantages and disadvantages in each of the stocks. That is, business is all about. By investing in stocks, you are going to make an investment in that particular company or industry. There is no business in the world that involves no risk. Nobody is going to just to gift-away their profits to you without having risky investments. Therefore, it is wise to analyze any such risks and then invest in that particular industry. The Ship is safe in the shore, but it is not built for that purpose. Therefore, take a little risk and invest, thereby beat the inflation and reap rich dividends.
|Author: Mahalakshmi T 07 Jun 2011 Member Level: Gold Points : 1|
|Blue chip stocks also has its ups and down in the stock market. Not all stocks give good returns because various factors work for and against it. Investors should learn to exist the stock at the right time before making loss. But generally, the above mentioned stocks are performing well and will give decent returns.|