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Monday, July 12, 2010

All about Market Cap's

Many a times, we come across the term 'Large cap', 'Midcap' etc. Though we may understand this terms to certain extent, here is the accurate explanation for the same.

Before that, Market capitalization (market cap in short) is the total current value of the company. This means the total number of shares multiplied by current market price per share.

Top 100 companies is taken broadly as the border for Large Cap companies. As mentioned in the picture below, any company whose current value is Rs11,132 crores and above, are included in the large cap sector.

Similar is the boundry for Mid and small cap.

Any mutual fund which invests only in Large cap companies are called Large Cap Funds. Similar is the case for Mid and small cap. And any fund which invest in all the market cap stocks are called as Multicap Funds.

In general, Large cap companies are grown up. Mid cap are fast growing and small cap are budding companies. The risk profile varies between these stocks : Highest risk for a small cap and relatively lower risk for a large cap.

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