Market capitalisation (market cap) represents the total value of a company's outstanding shares, calculated by multiplying the current market price per share by the total number of outstanding shares
Market cap, or market capitalization, is one way of measuring
a company's total value, based on outstanding shares of stock. Market cap is also used to compare and categorize
the size of companies among investors and analysts.
- Large Cap – Large cap companies are usually stable, reputable and
well-established businesses that have a significant market share. They
have market caps of INR 84300 crore or more. Due to the low volatility in
comparison with mid-cap and small-cap stocks, the risk associated with
investing in the stocks of large-cap companies is very low. However, the
downside to this is that the growth potential of these stocks is also low.
- Mid Cap – Mid-cap companies have a market cap ranging from INR 27600
crore to INR 84300 crore. While the risk of investing in these companies
is higher than investing in large-cap companies owing to the increased
volatility of their stocks, they tend to have a higher growth potential.
- Small Cap – Small-cap companies operate at a smaller scale than
large-cap and mid-cap companies. Consequently, their market cap is also
lower (less than INR 27600 crore). Stocks belonging to these companies
have considerable growth potential, but are also extremely volatile. Thus,
they are often the riskiest options for investors.
These class of shares have significant differences in risk
& return and related parameters.
Comparison of different market cap classes
|
Particulars |
Large-cap |
Mid-cap |
Small-cap |
|
Mkt
capitalization Limit |
Top
100 |
101-250 |
251
onwards |
|
Risk
Profile |
Low |
High |
Very
high |
|
Liquidity |
High |
Moderate |
Low |
|
Volatility |
Low |
High |
Very
high |
|
Returns |
Average |
High |
Very
high |
|
Growth |
Reasonable |
High |
Very
high |
According to the SEBI circular no: SEBI/HO/IMD/DF3/CIR/P/2017/114dated October 6, 2017 on Categorization and Rationalization of Mutual Fund Schemes, schemes are broadly classified as:
a. Equity Schemes
b. Debt Schemes
c. Hybrid Schemes
d. Solution Oriented
Schemes
e. Other Schemes
Further Equity shares are classified into Large , Mid and Small cap based on market capitalisation for uniformity in the Mutual Funds schemes that will enable easy comparison by investing public:
a. Large Cap: 1 st
-100 th company in terms of full market capitalization
b. Mid Cap: 101 st
-250th company in terms of full market capitalization
c. Small Cap:
251st company onwards in terms of full market capitalization
AMFI used to publish the market capitalization limits for these classes periodically as these are moving target with passage of time.
Movement of Market Capitalization Floor Limit
Rs Crores
|
Period |
Large-cap |
Mid-cap |
Small-cap |
|
Jan-June
2024 |
84, 300 |
27, 600 |
Below
27600 |
|
July-Dec
2023 |
67, 017 |
21, 994 |
Below
21994 |
|
Jan-Jun
2023 |
49, 687 |
17, 409 |
Below
17409 |
|
July-Dec
2022 |
48, 898 |
16, 813 |
Below
16813 |
|
Jan-June
2022 |
47, 461 |
16, 441 |
Below
16441 |
It is always advisable to go through Scheme Information Document(SID) and Statement of Additional Information(SAI) given in the Offer Document(OD) brought out by the Asset Management company(AMC) to understand the risk characteristics in detail.
Choosing an equity fund suitable to one's risk profile is a professional task. Leave it to SEBI registered MF distributors.
Now let us look at the classification of Debt MF products
The duration category is further divided into 7 classes as:
So there are lot of opportunities to select one's own type of MF products in combinations to suit convenience, risk profile and be classy. Take help from SEBI registered MF distributors.
Happy Investing
You may also be interested in
1. Why Rich become more Rich and poor Middle class remain poor?
2. SIP- The all weather investment approach
Disclaimer:
Mutual Fund investments are subject to market risks, read all scheme
related documents carefully. The NAVs of the schemes may go up or down
depending upon the factors and forces affecting the securities market including
the fluctuations in the interest rates. The past performance of the mutual
funds is not necessarily indicative of future performance of the schemes. The
Mutual Fund is not guaranteeing or assuring any dividend under any of the
schemes and the same is subject to the availability and adequacy of
distributable surplus. Investors are requested to review the prospectus
carefully and obtain expert professional advice with regard to specific legal,
tax and financial implications of the investment/participation in the scheme.
While all efforts have been taken to make this web site as authentic as possible, please refer to the print versions, notified Gazette copies of Acts/Rules/Regulations for authentic version or for use before any authority. Author will not be responsible for any loss to any person/entity caused by any short-coming, defect or inaccuracy inadvertently or otherwise crept in this blog, solutionsxgen.blogspot.com
