Market Capitalization

Market capitalization (or market cap) is a way to measure the total value of a company. It’s calculated by multiplying the current share price by the total number of outstanding shares of the company.

In simple terms, market capitalization tells you how big a company is in terms of its value in the stock market.

Formula:

$\text{Market Capitalization}=\text{Share Price}\times \text{Total Number of Shares}$

Example:

If a company has 10 million shares, and each share is worth ₹100, the market capitalization would be: $₹100\times 10,000,000=₹1,000,000,000\text{ (or ₹100 crore)}$

Market Capitalization Ranges in India

1. Large-Cap:
   • Value: Companies with a market cap of over ₹20,000 crore.
   • Examples: Established companies like Reliance Industries, TCS, and HDFC Bank fall into this category.
   • Characteristics: These companies are generally well-established, have a stable performance record, and are considered safer investments.
2. Mid-Cap:
   • Value: Companies with a market cap between ₹5,000 crore and ₹20,000 crore.
   • Examples: Companies like MRF, Amara Raja Batteries, or Page Industries.
   • Characteristics: These companies are typically in a growth phase, with higher potential for returns but also higher risk compared to large-caps.
3. Small-Cap:
   • Value: Companies with a market cap below ₹5,000 crore.
   • Examples: Smaller or newer companies with growth potential, like Balaji Amines or Gujarat Fluorochemicals.
   • Characteristics: Small-cap companies carry higher risk and volatility, but they can offer substantial growth opportunities.

In summary: Market capitalization helps you understand how big or small a company is in the stock market. In India, large-cap companies are valued over ₹20,000 crore, mid-cap between ₹5,000 crore and ₹20,000 crore, and small-cap below ₹5,000 crore.