What is the Meaning of Market Capitalization?

Market capitalization is also known as a Market Cap. Here we at A1 Intraday tips team try to explain to you the meaning of Market capitalization in the NSE share market. The Market capitalization means the total no of shares multiplied to the current value of share price in the share market.

The formula of Market capitalization is as below:

Market capitalization = (No of shares) x (value of share price in Market)

Examples of Market Capitalization

If the total number of Tata steel shares is 1,00,000, and the Tata steel share price is Rs. 300 in the share market, so the total Market Cap of Tata steel is = 3,00,000,00 (Three Crore Rupees).

How many types of Market Capitalization are there in the NSE Share Market?

There are three types of Market Capitalization:

• Large Cap
  
• Mid Cap
  
• Small Cap
  

What is the meaning of Large Caps ?

Here, A1 Intraday tips has given brief definition & information about the types of Market capitalization.

Large Caps mean companies market capitalization of more than RS. 20,000 Cr. These companies are well established and amongst the largest in their sector, also called Blue Chip Shares. Mostly long term investor prefers to buy this stock for good returns and with low risk. Generally, these companies are part of the Large Cap Index like Nifty 50 stocks. The Mutual funds, FII and DII, HNI traders and long term investors choose to invest in Large cap Companies Like Reliance, Maruti, TCS, Accenture, L&T, etc. The small Investor can now invest in large cap Mutual Fund which have been impacted due to Corona virus Effect. with small capital.

What is the meaning of Mid Cap?

Mid cap are companies with a market capitalization (Market value) between 5000 to 20000 cr. Generally, the shares of the Mid Cap Companies are highly volatile and risky; they also offer good returns in the bullish market and vice versa with a huge loss in the bearish market.

In the NSE share market, Nifty also has Midcap index in India called the Nifty Midcap 50, which hosts the top 50 most traded mid-cap shares in the NSE (National Stock Exchange).

What is the meaning of Small Cap?

Small Cap refers to those companies with a market capitalization (Market value) below 5000 cr. Investing in small cap companies is very risky because stocks are traded with very low volume (low liquidity). Sometimes the investors even lose their entire capital in small cap companies.

A1 Intraday Tips strongly suggest to beginners and to small investor please do not invest in small companies without any knowledge.

Market cap is the measure of the company that is it worth on the open share market and market's perception of its future prospects.

Huge market capitalization companies have strong financial strength and are well established in their sector. Mostly they are called blue chip stock. Long term Investor, FII, DII and Mutual funds are having the good holding in the huge market capitalization shares.

How does market cap affect stock price:

Market capitalization completely depends upon the current stock price. If the stock price is continuously going up then the Market cap is Good (Big) and vice versa. And if the stock price is going continuously down, the overall market cap is small (low). Those companies having big (huge) market capitalization mostly falls in goods, services and consumption sector.