A blue-chip is a stock with a good reputation for quality, reliability, and the ability to operate profitably in good and bad times. These stocks are known to have the capabilities to endure tough market conditions and give high returns in good market conditions. They withstand the pressures of the Bear market and perform very well in the Bull market. They are often the market leaders in their respective industries. Due to their quality and performance, they tend to cost a little higher than the rest of the stocks. The origin of the word Blue Chip is from the game Poker. The Poker Chips are White, Red, Blue in Colour and their value also increases in that order respectively. Thus Blue Chip denotes the higher value (Although Green and Black Chips have an even higher value- But that is for a Poker Class). Oliver Gingold, who worked at Dow Jones, coined the phrase ‘Blue Chip’ in 1923. While standing near the stock ticker at a brokerage firm (which later became Merrill Lynch), noticed that several stocks traded at $200 or more per share. He called them ‘Blue Chip Stocks’. In the beginning days of the use of the term, Blue Chips denoted high-priced stocks. But later it is used to represent the high-quality stocks. Generally, a stock that qualifies as Blue Chip has strong fundamentals, good returns over a long period of time, low debt, low operating costs, and higher profitability. The financial ratios of these companies are at a favored value to attract investors. Above all, they have the ability to perform reasonably well even in bear market conditions. In the Indian Context, the Blue Chips can be Reliance, TCS, State Bank of India, Reliance, etc.,
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