Stock Market Learning Blog


Friday, May 15, 2020

Large-Mid and Small cap what's the difference?

                        Hi all this is Giri from MarketPandit blog there are a number of companies listed in the stock market, it is simple to find a difference between large-cap companies and mid-cap companies and small-cap companies in India

Public limited companies are issue shares to raise their capital to expand their business growth, those companies share are traded in the stock market, stock exchanges categorized the companies in three types large cap and mid cap and small cap, first of all, you need to know what is market capitalization let you know about the entire concept

  • what is market capitalization.
  • why companies are classified.
  • what ate large, mid and small cap.

Market capitalization:

Market capitalization is simply calculated by the current share price of a company and no. of outstanding shares of a company, the market capitalisation shows the size of a company lets you know the formula

market captalization = total no.of shares * current share price

market cap (or) market captalisation both are same it  multiples total companies outstanding shares and market price of a share

for example have a XYZ Company listing in a stock market their total number of share are 1500 their current market price odf one share is 10000rs

the total market captalization is 1500*10000=15,000,000/-

therefore the XYZ company market captalisation is 1.50 crores

now let's move to the topic are you clear with the market capitalization, and how the market capitalization classifies like large, mid, small cap let's  see

  • according to the Bombay stock exchange, all the companies are listed in a descending order
  • large capitalization companies occupy 80% of market capitalization
  • and mid-cap companies occupy 15%of market capitalization
  • and finally, remaining  rest of the companies 5% market capitalization called small-cap companies
  • bombay stock exchange categorized the capitalization wise listed companies

what are large cap, mid cap and small cap:

large cap companies :

large capitalization companies are well established and strong fundamental background, most large-cap companies are the leader in their sector, these companies have a large capitalization, and it defines the economic conditions of the country, they have a good business strength and well,

  • many large-cap companies are listed in BSE30 and Nifty 50 stocks
  • large-cap companies have high capitalization more 20,000 crores
  • they have a good business model and high liquidity
  • those companies are low risk to invest

here is a few large-cap companies like TCS, ITC, SBI Etc...

Mid-cap companies:

mid cap companies are mid-sized companies, mid-cap companies are larger then small-cap companies, they have more growth potential than the large and small cap, liquidity in mid-cap is higher than the small-cap,mid-cap companies are considered as a border to large cap

  • many large-cap companies are listed in BSE mid-cap and Nse mid-cap stocks
  • mid-cap companies have high capitalization more 5,000 to 10,000 crores
  • they have a good business model and moderate liquidity and moderate risk

here some of the mid-cap companies are like Apollo Tyres, Indraprastha Gas, tata powers, Canara bank etc....

small cap companies:

small cap companies  have small capitalization, they consider as start-ups, in small-cap companies are very risky to invest, those companies don't have a good financial strength and good track record, before investing in small cap should do more research before investing, they have a low liquidity and high risk and growth level will be moderate and high depending of company,

  • generally, the company have below 5000 crores market capitalization.
  • many small-cap companies are listed in BSE small-cap and Nse small-cap stocks
  • they have a low liquidity and highly risky to invest
  • here are some companies like career point,jayasree tea, Godavari power etc...

hope its helpful ............

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