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Large-Cap, Mid-Cap, Small-Cap, Definition ||Market Capitalization



Large cap mid cap small cap



Large-cap Small-Cap Mid Cap

Investment is a very an important part of your life and you should know about which funds will be better for you that will make a good profit with your investment.

We always heard about large-cap mid-cap small-cap companies.

Most of the investor is confused about large-cap mid-cap Small cap companies.

In this article, we will tell you about what are the large-cap small-cap mid-cap companies which Are introduced by SEBI (Security and Exchange Board of India) and Which Company will be better for investors to make a good amount of profit.


Let’s Gets started……..

My Name is sarvesh and me usually write articles on my blog Taxinvestcare about personal finance investment and Business News.

Note:- Cap stands for Capitalization.


Market Capitalization


Market capitalization is one of the important terms to understand small-cap large-cap mid-cap.

Market capitalization is basically, the total market value of a company and someone wants to buy the whole company that needs to pay to the market value of that particular company.

Market capitalization shows the size and the total value of a company.

 It is the total value of shares.

How to calculate Market capitalization (Important)


There is a big and important question is arise for nubies is that how to calculate the market capitalization of a company.

We can’t calculate the market value or market capitalization with the share value.

There is process or Technique is available in the industry to calculate the market capitalization of a company.

To calculate the market capitalization of a company you need to multiply the total number of outstanding shares with the current market price per share.

Outstanding share


A share owned by the stockholder, company officials, and inventory. The share of the owners is not included in outstanding shares.

Formula


There is a simple and easy to understand formula available to calculate the market capitalization of a particular company.

Market capitalization =Total Number of outstanding shares * current Market value

Let’s take an example to make it easy to understand

Company Name: - X

Total No. of Outstanding Shares: - 2 Lakhs

Current share price: - 1000Rs per share

Market capitalization:2 Lakhs  * 1000Rs=20 Crore

The market capitalization of company X 20 Crore.

All cap companies are deciding by market capitalization means what is the market value of a particular company.

But a miscalculation is created in the market that most of the people are measured the market capitalization of a company by a fixed amount of value and that is wrong.

For the example above 10,000Cr Amount, Company will be large-cap and less than will be small-cap and many discourage thinks.

So is this exact definition to determine the large-cap small-cap mid-cap companies well it’s actually not uniform.


SEBI (Security and Exchange Board of India) Circular


To make it uniform SEBI (Security and Exchange Board of India) introduce a circular in 2017 because mutual funds are invested in small-cap, large-cap, mid cap mutual funds.

Classification of a company using Market capitalization


Classification of a company using market capitalization in the Indian stock market.

1.     Large Cap Companies

2.   Mid Cap Companies

3.   Small-Cap Companies

Large-Cap


It is the well-established companies in the market and most of the large-cap companies are a leader in their sector.

According to SEBI circular Top 1st to 100th company is known as large caps company as per market capitalization.

Large-cap as companies are also known as Blue-chip companies.
The market capitalization of these companies is very high and they can survive in adverse economic conditions.

Invest in large-cap companies is very safe and less risky and that is the reason that the profit of the company is relatively less.

In the long term prospectus investing in large-cap companies will profitable investment.

Example of Large Cap companies


Bharti Airtel

Hero Moto cop

ICICI Bank

Asian Paints and many more.


Mid-Cap


Invest in Mid-cap companies are high risky as compared to large-cap companies.

Mid-cap companies 101st to 250th company as per market capitalization.

Risk is high in these companies so the profit investor makes high as compare to large-cap.

Example of Mid Cap companies 


Bata Indice

Tata Power Company

Apollo Tyres

Castrol 

Spice Jet

Small-Cap


Small-cap companies usually have startups companies and that is in the development stage.

251st onwards company as per market capitalization.

Invest in small-cap companies are very high risky because there are fewer chances of a startups company to be successful.

But if you research properly than invest in small companies then you have to chance to make a high profit as compare too mid-cap and large-cap.


Nifty Index and types of Nifty Index


These companies are deciding on the Nifty Indexes.

You can follow some nifty index to know about these company's market capitalization amount and position in the market, the share price of a company, and many more things about companies.

There is a list of Nifty Index, to know about large-cap, mid-cap and small-cap funds.


Nifty 100 Index is a type of Index. To follow the Large-cap companies you can follow this index.

Nifty 100 Index is a stock index represents major sectors of the company.

It represents Top 100 companies based on full market capitalization for Nifty 500.

Important


Nifty 100 Index represents about 78.4% of the free-float market capitalization of the stock listed on NSE as on March 31 2017.


Nifty Midcap 150 Index represents the next 150 companies based on full market capitalization.

Important


It represents about 13.5% of the free float the market capitalization of the stock listed on NSE as on March 31, 2017.

Nifty small-cap 250 indexes represent the balance of 250 companies (250-500) from Nifty 500.


Important


It represents about 5.9% of the free float the market capitalization of the stock listed on NSE as on March 31,2017.

Parameters


Now let’s compare the large-cap, mid-cap, small-cap companies on some parameters.

The Parameters are:-

1.     Return Potential

2.   Risk

3.   Liquidity

4.   Volatility

5.    Institutional Investors


Return Potential


Return Potential means what is the average return of a company provide for the past 5-10 years.

It is basically used for secure Investments.

Risk


Risk is a very important term to identify the companies.

It means how much risk you have taken in your investment.

Liquidity


Liquidity is simply a volume of buy and sell share.

It represents a trading volume of shares.

Volatility


Volatility represents the daily performance of a share.

It represents how much a share increase and decrease daily.

Institutional Investor


An institutional investor like mutual funds investors and foreign investors.


There is a graphical Representation of Large-Cap Mid-cap and small-cap companies on the basis of parameters.


Market capitalization large cap mid cap small cap

Where to Invest


Investment in the stock market or mutual funds is a very big decision, so you need to be careful while investing.

There are multiple options available for investor to invest in the stock market or mutual fund like large-cap, mid-cap, small-cap companies.

All these companies have their features that make them better. 

But investing in one of them is totally depends on investor.

An investor can invest in all of them.

An investor invests in the stock market or mutual funds according to their risk appetite and time vision (long term or short term).

For example, if an investor wants to invest in long term investment then the large-cap companies can make their investment successful.


On the other hand, if an investor wants to invest for short term investment. It will be one of the best options for you.

They can go with mid-cap and small-cap companies.

In the end, I would like to say investments totally depend on your risk appetite and your investment goal or time.

You can invest in your favorite company or funds.

That will make you a successful investor.











 

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