Market Capitalisation
The single number that tells you how big a company really is — and why price alone lies.
Market cap = share price × total number of shares
The total market value of the whole company — what it would cost to buy every share.
This is the number that tells you a company’s real size — not its shareA unit of ownership in a company. price. A ₹50 stock can be a far bigger company than a ₹5,000 stock, depending on how many sharesA unit of ownership in a company. exist.
ShareA unit of ownership in a company. price alone is meaningless for judging size or value — it depends entirely on how the company sliced its pizza. Market capA company’s total market value: share price × number of shares. is the honest size gauge. Internalise this and you’ll never again think a ₹50 stock is “cheap” or a ₹5,000 one “expensive.”
- Large-capThe biggest, most established listed companies. — biggest, most stable companies (broadly top ~100). Lower risk, steadier.
- Mid-capMedium-sized companies between large- and small-caps. — established but still growing (~next 150). More growth, more volatilityThe size of price swings — not their direction..
- Small-capSmaller companies with high growth potential and high risk. — smaller, riskier, higher potential and higher chance of failure.
Common mistake“This ₹20 stock is cheaper than that ₹2,000 one.” Price per shareA unit of ownership in a company. says nothing about cheap or expensive — only valuationEstimating what an asset is worth. ratios (P/E, etc., covered in Investing) do. Market capA company’s total market value: share price × number of shares. tells you size, not value.
Key takeawayMarket capA company’s total market value: share price × number of shares. (price × sharesA unit of ownership in a company.) is the true measure of company size; shareA unit of ownership in a company. price alone reveals neither size nor value.
FAQs
What defines large-, mid- and small-cap in India?
SEBI uses a ranking by market cap: roughly the top 100 companies are large-cap, the next 150 are mid-cap, and the rest are small-cap. The boundaries shift as companies grow or shrink and are reviewed periodically.