What is a share in a company?
A share is a financial instrument issued by a company that represent a fraction of ownership in the company. Words shares, stocks and scripts are quite often used interchangeably.
What is a Market Cap in a company? Or What is Market Capitalization of the Company?
Market Cap of a company means Total Value of the company as determined in the Share Market or Public Market.
Mathematical Formulae of Market Cap is:
Market Cap = Price Per Share (X) Total Number of Shares of the Company
For example, Market Cap of Reliance as on 03rd Nov 2023 is as follows:
A) Market Cap of Reliance =
Rs. 2319 (Price/Share) (X) 6,76,60,66,838 (No. of Shares) = Rs. 15.70 trillion Lakhs
B) Market Cap of Zomato =
Rs. 117.90 (Price/Shares) (X) 8,252,380,952 (No of Shares) = Rs. 97,295 Crore
What is Large-Cap Shares?
As the name suggest, large cap shares have Large or High Market Capitalization. As per SEBI classification criteria, Large Cap Shares are Top 100 Shares with Market Capitalization that are listed on the BSE or NSE or any other exchange in India. Large Cap Shares thus includes big and prominent listed companies like Reliance, HDFC Bank, Tata Motors, Infosys, Zomato, etc. You can get the full list of Large Cap Companies in the below link:
What is Mid-Cap Shares?
Mid-Cap Shares are the next 150 Shares with Market Capitalization after Large Cap Shares (After Top 100) that are listed on the Stock Exchange. Mid Cap Shares includes listed companies like Yes Bank, Paytm, MRF, Ashok Leyland, etc. You can get the full list of Mid Cap Companies in below link:
What is Small-Cap Shares?
As again the name suggests, shares that have Low Market Capitalization are categorized as Small Cap Shares. As per SEBI Classification, listed companies that are not categorized as Large Cap Shares and Mid Cap Shares are classified as Small Cap Shares. Thus, companies after Top 250 Market Capitalization are the Small Cap Shares.
What is Risk and Rewards in Investing with Large Cap, Mid Cap and Small Cap Shares
Particulars | Large Cap | Mid Cap | Small Cap |
Risk of Loss of Capital Invested | Low | Medium | High |
Reward of Gain of Capital Invested | High | Medium | Low |
Volatility in Prices of Shares | Low | Medium | High |
Recommended Investment Period to Maximize Gain | Long Term / Mid – Terms | Long Term / Mid - Term | Short – Terms (To Gain from Volatility of Prices) Mid Term / Long Term if Company is Fundamentally Strong |
Note: Above table is indicative of risk and rewards and can defer on basis of each particular shares / script
Indexes of Large Cap / Mid Cap / Small Cap Shares
Indexes are the indicators of performance of group of shares. Below are the indexes:
Particulars | Large Cap | Mid Cap | Small Cap |
BSE Indexes | BSE LargeCap | BSE 150 MidCap | BSE 250 SmallCap |
NSE Indexes | NIFTY 100 | MIDCAP 150 | SMALLCAP 250 |
Past 3 Months Gain on BSE Index | -0.56% | 5.32% | 6.54% |
Past 6 Months Gain on BSE Index | 6.63% | 21.54% | 25.93% |
Past 1 Year Gain on BSE Index | 4.30% | 21.98% | 28.43% |
Past 2 Year Gain on BSE Index | 6.71% | 23.68% | 27.45% |
Past 3 Year Gain on BSE Index | 61.85% | 119.96% | 144.08% |
Past 5 Year Gain on BSE Index | 78.00% | 137.70% | 127.30% |
Myths Relating to Classification of Large Cap, Mid Cap and Small Cap Shares
It is generally understood that, if the price of shares of the company is low (i.e Rs 100 or Rs 150) than the company is Small or Mid Cap Company and if the Price of the Company is High than it is Large Cap Company. For Example, Price of Zomato is Rs 109, but it is Large Cap Company and Price of MRF is Rs. 1 Lakh plus but it is a Mid Cap Company.