Market Capitalisation (Market Cap)

Market Cap is a common term in the stock market. It is a very easy way to figure out the total value of a company. In order to calculate it, simply multiply the company’s stock price by the total number of existing shares in the market.

Key Formula

Market Cap = Stock Price × Total Shares Outstanding

What It Means

Market cap of a company is an instant way to interpret how big a company is and its overall value in the stock market. It shows how much investors think the company is worth based on its current stock price.

Types of Market Capitalization

Mainly, when it comes to size, market caps are divided into three key types;

• Large-Cap: Companies with a market cap of ₹75,000 crore or more. They are typically big and stable.
• Mid-Cap: Enterprises between ₹5,000 crore and ₹75,000 crore. High growth potential yet comparatively more risk.
• Small-Cap: Firms with a market cap of under ₹5,000 crore, often new and riskier, but with higher growth chances.

Why It Matters

Market cap helps investors size up a company and decide whether it matches their investment goals. Large-cap companies are usually seen as more safer choices. On the other hand, small-cap companies can grow faster but involve higher risks.

Examples of Market Cap Categories

• Large-Cap: HDFC Bank, Bharti Airtel, SBI, ITC
• Mid-Cap: Zomato, Marico

Small-Cap: Start-ups or smaller tech companies listed in India