Differences among small-cap, midcap and large-cap shares
Kajari Goswami
New investors in the stock market need to understand what is large-cap, mid-cap, and small-cap.
The primary difference between the three are their growth potential and risk.
Small-caps have growth potential, mid-caps balance stability and expansion, and large-caps are dependable.
The stock market classifies the stock based on their market capitalisation.
Market cap or market capitalisation is the total number of outstanding shares of a company in the market multiplied by the current price of each share.
Large-cap: The companies that dominate the industry with well-established businesses and large market caps are stable. It is good for investment with lesser risk. They are less volatile.
Mid-cap: Companies that have a market cap over Rs 5,000 crore. They are more volatile than large-cap companies but less volatile than small-cap companies.
The level of risk in these investments is also higher than in large caps. These companies can offer larger growth in comparison to large-cap stocks.
Small-cap: These companies are relatively smaller and have the most growth potential but the risk is also high in these stocks. These companies are volatile.