Share markets in India continued to trade in the red during closing hours and ended their trading session marginally lower. Sectoral indices ended on a mixed note with stocks in the IT sector and metal sector witnessing most of the selling pressure.

At the closing bell, the BSE Sensex stood lower by 79 points (down 0.2%) and the NSE Nifty closed down by 13 points (down 0.1%). The BSE Mid Cap index ended the day up 0.7%, while the BSE Small Cap index ended the day up 0.6%.

The rupee was trading at 72.59 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 2.4% and the Shanghai Composite was down by 1.4%. The Nikkei 225 was down 1.1%.

In the news from the banking sector, Punjab National Bank share price was in focus today after the government of India increased stake in the bank by 5.83%.

PNB on Thursday informed that the government bought an additional 0.6 billion shares in the bank.

With this, the government’s stake in the bank has increased to 71.92% from 66.09%.

Speaking of PNB, a blue-chip stock, Sarvajeet offers an interesting observation about investing in blue chips.

The chart below demonstrates this point very well:

In January 2018, PC Jeweller’s market cap was in north of Rs 200 billion.

So, if your metric for safety and quality was market capitalization then this company may have qualified.

However, once the Vakrangee episode broke out and there were serious questions on PC Jewellers corporate governance practices, the frenzy was over.

It is a small cap now, with a market cap of around Rs 50 billion.

It’s a situation like these where Tanushree’s safety first approach to investing comes handy. She strongly believes all large caps are not necessarily blue chips.

She judges ‘Safety & Quality’ by looking at metrics like long-term ROEs, robust operating cash flows, lean balance sheets, management credibility, and transparency in the books of accounts etc.