Large-cap, mid-cap and small-cap stocks: what’s the difference?
Ajay is a beginner in the stock market and wants to understand the difference between large-cap, mid-cap and small-cap.
His friend Ashish, a seasoned investor in Angel Broking, explains market capitalization is the total market value of a company based on
its current share price and the total number of outstanding stocks. For example, the market capitalization of crystal art industries with its shares trading at 50 rupees and one crore shares outstanding is 50 crore rupees.
Generally there is no fixed parameter for market cap but companies with a market capitalization of around 10000 crore rupees are considered as large caps while companies with a market capitalization below 10000 crore rupees are mid and small caps.
Large caps are stocks of large well-established companies with stable business models that are considered safe investment. They can bring you moderate yet safe returns mid-cap companies are usually in the growing phase and have the potential to grow to large cap. Small cap companies usually include startups, mature companies with small industry size etc. They could be big gainers but should be researched properly. Ajay now understands the difference between large cap, mid cap and small cap and is ready to trade with Angel Broking.