Large cap stocks are the shares with a large market capitalization. There are many individuals who prefer buying into the large cap stocks as they are much safer and less volatile.
It is important to remember that when the markets fall, large cap stocks fall to a smaller extent, as compared to small and midcap stocks. This is why they maybe preffered.
Read what is large cap stocks and difference between large cap, small cap and midcap stocks here
Tata Motors is always a great large cap stock to own. In fact, at around 8 times one year forward earnings this is the cheapest Sensex stock to own.
There are a number of positives that could work in favour of the Tata Motors in the coming quarters. The first is that there could be faster economic growth that could happen thus pushing demand for the company's commercial vehicles higher.
In fact, for the month of Aug 2018, Tata Motors saw a 27 per cent rise in domestic sales at 58,262 units in August as compared to 45,906 units in the same month last year.
Domestic passenger vehicle (PV) sales were up 28 per cent to 18,420 units compared to 14,340 units last year, the company said in a statement.
The company said its commercial vehicles (CV) sales in the domestic market stood at 39,859 units in August as against 31,566 units in Aug 2017, a growth of 26 per cent.
A spate of launches in the Jaguar Landrover range should see global revenues and profits too surge. Tata Motors has seen its stock price fall from levels of Rs 470 to the current Rs 260. At the current market price, the shares do offer some value.
We like Coal India for a number of reasons. The first and the most important is that even if the stock falls, the dividend that ones gets easily compensates for any downward risk in the stock.
At the current market price of Rs 272, the dividend yield itself is a healthy 5 per cent. This dividend is enough to compensate in case there is a drop in the share price. There are other reasons which make this stock among the best largecap stocks in India.
Among these include the solid monopoly business that Coal India has. Apart from this, it is a high margin business, and the company is debt free. Continuity of business along with almost very little dangers to business, make it a great large cap stock to own.
The government's recent thrust on "power for all" should keep coal demand high in the months to come. The risks of a downside are minimum at this point. The company tends to declare dividends in the month of Feb, so watch for this stock in the next few months.
The government owned Hindustan Petroleum Corporation (HPCL) is a good stock to own for a number of reasons. First is that the stock has almost halved from 52-week high levels of Rs 248, thanks to a sharp rise in the price of crude and a fall in the rupee.
The company has grown at a whopping pace in the last 5 years with net profits growing seven times, during the period.
The company has consistently been rewarding its shareholders though bonus and solid dividends. In fact, the dividend yields on the stock were as high as 8 per cent.
HPCL remains the largest lube manufacturer in the country and is also has the largest pipeline network.
HPCL: reasonably valued
The company has lined up ambitious expansion plans including expansions at Vizag and Mumbai. In fact, the various expansion plans at the company would cost it near Rs 75,000 crores in the net five years.
At the moment the only threat for the company comes from rising crude prices. However, the government has so far not intervened and asked oil marketing companies to freeze petrol and diesel prices.
Assuming that it does not, HPCL remains an excellent stock to buy. It is almost impossible today to create a retail network like HPCL for newcomers. Apart from this the stock is very cheap at around 8 times one year forward earnings. It also is trading at just 1.5 times book value and can offer a decent dividend yield of 6 to 7 per cent going forward. A good stock to buy for the long-term.
Why to buy large cap stocks in India?
There are many reasons to be buying into large cap stocks in India. The first is that these are the bluest of blue chips. These stocks tend to fall to a smaller extent as compared to stocks from the mid cap and small cap space. What this means is that you can protect your capital and prevent a damage to it, as compared to small and mid cap stocks. Secondly, they are more liquid and hence you can sell larger quantities. Thirdly, it is easy to get a loan against shares for stocks from the large cap space.
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