What is Market Capitalization in Stock Market? Market Capitalization Importance ?

Overview

Market Capitalization is the approximate value of any company. We defined it by the total market value of the outstanding shares of a company. It is calculated by multiplying the current market price of the company’s share with the total outstanding shares of the company.

How to calculate Market Capitalization of company

MC = N X P

Here…
MC = Market Cap
N = Number of per Share
P = Closing price of Share
Market Cap = Number of per Share X Closing price of Share

Let’s take an Example
N = 10,000
P = 100
Market Cap = 1,000,000 (10 lakh)

Importance of Market Capitalization

For the smart investment in the investor follow the stock market company market capitalization. Generally the Large Cap company own more capital than small cap or micro cap company. The large cap companies has low risk for investors

Types of Market Capitalization

In India the company market capitalization divided in four parts that are
1) Large Cap
2) Mid Cap
3) Small Cap
4) Micro Cap

1) Large Cap

The Large Capitalization companies have reached the pinnacle of their growth, and as a result, there is a lesser chance of any drastic change in stock prices. The total value of those companies from Rs.7,000 crore up to Rs.20,000 crore

2) Mid Cap

The value of these companies are from Rs.500 crore up to Rs.7,000 crore. This group of companies is considered to be more volatile than the large-cap companies. Growth stocks represent a significant portion of the mid-caps.

3) Small Cap

These are companies who are budding and are yet to establish themselves in their industry. This makes them highly risky. Both Success and failure can sky-rocket their stock prices. The value of these companies are from Rs.150 crore up to Rs.500 crore.

4) Micro Cap

They are the penny stocks that are relatively young. The micro-cap companies potential for growth and decline are of similar nature. The value of these companies are from Rs.150 crore up to Rs.500 crore.