Market Capitalization

Market Capitalization, often shortened to Market Cap, is a key financial concept used in stock trading to determine a company’s total market value. It’s calculated by multiplying the company’s current share price by the total number of its outstanding shares in the market. In essence, it provides a snapshot of a company’s worth, measured by its stock market value.

Market Cap is widely used amongst investors to classify companies into different sizes: small-cap, mid-cap, and large-cap. Small-cap refers to companies with a market value of under ₹500 crores. Mid-cap companies typically have a market cap between ₹500 crores and 7,000 crores, while large-cap companies sit above ₹7,000 crores.

It’s an essential tool in stock trading because it assists investors in making strategic investment decisions. For instance, large-cap companies are generally taken to be more stable and secure, but might offer slower growth. On the other hand, small-cap enterprises might pose more risks but provide more potential for rapid growth.

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