What is Market Capitalization?

Market capitalization can be defined as the total value of the company that is traded on the stock market. It is
calculated by multiplying the total number of shares by the current market per share price. The following is the
formula for market capitalization:

Market capitalization = Total number of outstanding shares of the company * Current market price per share.

For example – if the current market price of XYZ company is Rs.10 and the total number of outstanding shares of the
company is 100,000.

Then, market cap = 100,000*10 = 10,00,000

Therefore the market capitalization of XYZ company is 10,00,000.

As mentioned above, based on the market capitalization, the companies registered with SEBI are classified as large
cap, mid cap and small cap, following a uniform pattern. As per the SEBI guidelines the companies are classified as:

Large-cap – companies ranked between 1 and 100, when sorted by market capitalization.

Mid-cap – companies ranked between 101 and 250, when sorted by market capitalization.

Small-cap – companies ranked beyond 250, when sorted by market capitalization.

Risks :
- Large cap funds invest in large cap companies with a good reputation and excellent track record in
the stock market. Also, they have a significant market share and consistent performance. Thus, this makes
them less risky than mid cap and small cap stocks. eg, companies in Nifty 50.
- Mid cap funds invest in mid cap companies with relatively higher risk than the large cap companies
but lower than small cap companies.
- Small cap funds invest in small cap companies that are riskiest amongst the three, and thus tend to
have a higher fluctuation in market prices which in turn increases the risk for investors.
Returns :
 Large cap funds provide stable and steady returns with low volatility.
 Mid cap funds can offer higher returns than large cap funds as the growth potential is more.
 Small cap funds can offer higher returns than large and mid cap funds, due to great potential for
growth. However, they are more volatile due to their nature and company size.
How large cap, mid cap and small cap funds in India are categorised?

The categorization of funds in India, into large-cap, mid-cap, and small-cap is based on market
capitalization. Large-cap funds have the highest market capitalization company stocks, mid-cap funds fall in
the mid range company, and small-cap funds have the lowest market capitalization.

Large-Cap Companies :
- The SEBI has developed criteria for classifying companies. The top 100 companies listed
in the stock market based on market capitalization are classified as large-cap companies.
The mutual funds that hold the companies from the large-cap are called ‘Large-cap
funds’.
- Large-cap companies usually have good track records. The market value (market cap) of
these companies is significantly high. These are also called ‘blue-chip stocks’. The
market cap for these companies is around Rs.20000 crores and more, and they have a
strong market presence.

Examples of Large-Cap Companies :

Name of the Company Market Cap

19.508T
RELIANCE INDUSTRIES
INR

14.773T
TATA CONSULTANCY S
INR

10.861T
HDFC BANK
INR

ICICI BANK 7.183T INR

INFOSYS LTD 7.03T INR

LIFE INSURANCE CORP OF INDIA 6.61T INR

BHARTI AIRTEL LTD 6.378T INR

STATE BANK OF INDIA 6.029T INR

HINDUSTAN UNILEVER 5.7T INR

ITC LTD 5.39T INR

LARSEN & TOUBRO 4.665T INR

HCL TECHNOLOGIES 4.382T INR

BAJAJ FINANCE LTD 4.152T INR

ADANI ENTERPRISES 3.681T INR

Mid-Cap Companies :
-SEBI established a rule in the year 2017, according to which companies that are ranked
from 101 to 250 in terms of market capitalization are known as mid-cap companies. The
market cap for these companies will be around Rs.5000 to Rs.20000 crores. Mutual
funds that hold stocks from the mid-cap are called ‘Mid-cap funds’.
- Mid-cap companies also have a good track record, but the difference is noticeable
compared to large-cap companies. Mid-cap funds are involved with more risk than large-
cap funds. Mid-cap companies may or may not be included in broad market indexes due
to their limited market presence.
Examples of Mid-Cap Companies :
Market
Name of the Company
Cap

67,083.3
Suzlon Energy+
4
59,202.3
SJVN+
6
50,798.7
Indian Renewable Energy Development Agency+
5
50,247.5
The New India Assurance Company+
2
45,249.9
Bank Of Maharashtra+
8
 42,176.3
IRB Infrastructure Developers+
8
39,647.6
Housing & Urban Development Corporation+
3
36,974.6
NLC India+
7
35,547.1
Kalyan Jewellers India+
3
35,158.3
Mangalore Refinery & Petrochemicals+
6
35,033.2
Bharat Dynamics+
8
33,875.5
Global Health+
4
33,102.6
ITI+
6
32,940.3
Gland Pharma+
8
31,100.0
Nippon Life+
2

Small-cap Companies :
- The companies ranked from the 251st position onwards in terms of market
capitalization are known as small-cap companies. The market cap for these companies is
below Rs.5000 crores. The mutual funds that hold stocks from the small-cap are called
‘Small-cap funds’.
- Small-cap companies don’t have a long track record. For example, a start-up company or
a company that is under development can fall under the small-cap sector. These
companies are mostly not included in the broad market indices because of their
negligible market presence.
Examples of Small-Cap Companies :
Name of the Company Market Cap

PSP Projects Ltd. ₹ 761.60

Maharashtra Seamless Ltd. ₹ 895.85
Arman Financial Services Ltd. ₹ 2,591.25
Mold-Tek Packaging Ltd. ₹ 929.80
JK Paper Ltd. ₹ 397.85
Ion Exchange (India) Ltd. ₹ 557.35
Maharashtra Scooters Ltd. ₹ 7,442.40
Nesco Ltd. ₹ 877.30
Thyrocare Technologies Ltd. ₹ 661.95
Bajaj Consumer Care Ltd. ₹ 226.20
Heidelberg Cement India Ltd. ₹ 230.95
Mishra Dhatu Nigam Ltd. ₹ 407.65
Dhanuka Agritech Ltd. ₹ 1,150.90
Gulf Oil Lubricants India Ltd. ₹ 717.05
Gujarat Narmada Valley Fertilizers & Chemicals Ltd. ₹ 795.60