Market Capitalization’s related terms like big cap,mid cap and small caps. Every Company will have an upward or downward trend its business activities. Such changes will have an impact on its share value.
The term market capitalization refers to the value of a company. In simple terms it can be calculated for any company using the formula share price multiplied by the outstanding number of shares for a particular company.
The market Capitalization is a kind of public opinion about the company and its performance. As the number of shares that is outstanding is considered for finding out the market value you may find that the company whose share value is low will have better market capitalization and vice versa. If the market has a good opinion about the company then there will be higher market cap and those with negative opinions tend to have lower market cap.
The market cap is denoted based on some criteria and these are classified into the following:
Big Cap-Large Cap:
Blue chip companies come under the big cap segment as they are well established and will be the market leaders in all aspects. Such companies are highly reliable and their share price will not be that very volatile. They Provide lesser risk investment and the company performance over the last years would be stable giving a better public opinion about the company as a whole. The financial position of the company stands to gain the confidence of the investors.
These companies pay their dividend regularly to their shareholders which mean their profitability is steady. Some of the companies that come under this segment with include reliance industries, bhel and l&t. Such companies will help the investors give a fixed flow of income and is most suited for people who are not ready to take up higher risk. But during the bull market period investor may not able to fetch much returns from the big companies as they still grow in the same steady pattern.