In India, market capitalisation is a fundamental factor used by regulatory bodies like the Securities and Exchange Board of India (SEBI) to classify companies into different categories. This classification helps investors assess risk and make informed investment decisions based on standardised criteria. The framework provides clarity and consistency across the investment landscape.
Small-Cap Companies
Ranked 251st and below by market cap. These are often younger, smaller companies with higher growth potential but are also more susceptible to market volatility and economic downturns. Considered high-risk, high-reward investments suitable for aggressive investors.
Mid-Cap Companies
Ranked 101st to 250th by market cap. These companies are typically in a growth phase, offering a balance between the stability of large-caps and the higher growth potential of small-caps. They present moderate risk with attractive upside potential.
Large-Cap Companies
The top 100 companies by market cap. These are the largest, most well-established companies with high market capitalisations. Generally considered more stable and less volatile, making them popular for investors seeking steady, long-term returns.
Slide 3B - Market Cap Categories by Value (Approximation)
Understanding the classification of Indian equities based on market capitalization