Money Basics · Stocks & demat

Market cap

Market capitalisation (market cap) is the total value of all a company's outstanding shares. It's how investors measure the SIZE of a company.

The formula

Market cap = Current share price × Total shares outstanding

Take a large listed company: share price ₹1,450, shares outstanding 1,352 crore.

Market cap = ₹1,450 × 1,352 crore = ~₹19.6 lakh crore.

A company that size would rank among the largest listed in India.

SEBI's official categories

SEBI ranks all listed companies by market cap and categorises mutual funds based on where they invest:

Top 100Large-cap companies (by market cap)

101st to 250thMid-cap companies

251st and beyondSmall-cap companies

The risk-return trade-off

• Large-cap: the biggest listed businesses. Stable, well-researched, lower volatility. Lower growth potential but safer.
• Mid-cap: established businesses that are not yet among the largest. More growth potential, more volatility. Can become tomorrow's large-caps.
• Small-cap: lesser-known companies. Highest growth potential if they succeed. Highest risk. Many fail, some are manipulated.

> Broad small-cap indices have run up sharply in bull phases and given back a large share of those gains in the corrections that followed. Attribute any specific figures to a named index with an as-of date. This is the small-cap reality: the same volatility works in both directions.

For mutual fund investors

SEBI mandates that large-cap funds invest minimum 80% in top 100 companies, mid-cap funds invest 65% in 101–250, and small-cap funds invest 65% in companies ranked 251+.

What actually changes between the bands is worth weighing directly: how many analysts publish research on a company, so how much is already known and priced in; how easily you can sell a meaningful position on a bad day without moving the price yourself; and how deep the drawdowns run. How those weigh depends on how long your money can stay put and how large a fall you can watch without selling.

Takeaway. Market cap = price × shares outstanding. SEBI defines large-cap as top 100, mid-cap as 101–250, small-cap as 251+. Smaller cap = higher risk and potential return.