Module 2 ยท Understanding Companies
Market cap = share price x number of shares. It sizes a company into large, mid and small cap.
Market capitalisation (market cap) is the total value of a company's shares: the share price multiplied by the total number of shares. It tells you how big a company is in the eyes of the market.
Companies are grouped by size: large-cap (roughly the top 100 by market cap), mid-cap (the next tier) and small-cap (smaller still). Size affects risk and expected returns.
Large caps are usually more stable and liquid; small caps can grow faster but swing more and are riskier. Your mix of sizes should match your risk tolerance.
Example: Reliance Industries
Reliance is a large-cap with a market cap of well over a crore crore rupees. A small-cap like Suzlon is far smaller, so its price can move much more sharply on news.
Market cap is calculated as:
Why do you think small-cap stocks can be more volatile than large-caps?