Stocks

Categorisation of equity stocks: 5 things to know

1.Equity shares can be categorised into large caps, mid caps and small caps, basis their market capitalisation.

2. Large caps are defined as the 1st to 100th company in terms of full market capitalisation, mid-cap companies are the 101st -250th, and the 251st company onwards in terms of full market capitalisation are termed as small caps.

3.Large caps are less volatile compared to mid and small caps and hence, relatively less risky.

4.However, small caps have a huge earning potential, more than the mid and large caps.

5.Investors should select the type of stocks based on their risk profile and investment horizon.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.


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