Blog

Utilise your Online Trading Account with market cap stocks

Equity | September 29

If you are new to trading, you will come across the market capitalisation concept. Market capitalisation or market cap is frequently used in the securities markets because it gives you an idea of the total value of a company. Let’s do a detailed exploration of the term ‘Market Cap’ so that you as an online trading account holder can gain more from your online trading account.

What is Market Cap?

In simple terms, Market Cap is the value obtained when you multiply a company’s outstanding shares with the current price of one share. This value is the total value of all of the company’s stocks at that particular time when the calculation is done. This means that you can purchase the entire available stocks of a listed company with the market cap value at that particular time. Market Cap allocation is generally divided as Small Cap, Mid Cap and Large Cap. 

Nano Caps, Micro Caps and Mega Caps are other terms used by some financial analysts to determine the market cap value of the stocks. Large Caps and Mega Caps are blue chip stocks.

Here’s an example of Market Cap calculation:

Current share price of Company ‘Z’ = Rs. 100 per share

Outstanding shares of Company ‘Z’ = 1000

Current Market Cap of Company ‘Z’ = Current share price of Company ‘Z’ x Outstanding shares of Company ‘Z’ = 100 x 1000 = Rs. 100000

Interested online trading account holders can gain a better understanding of market cap by watching this video by Khan Academy: https://www.youtube.com/watch?v=5lmHzAHbtzg


Significance of Market Cap

Online trading account holders have to understand market cap primarily for comparison between the stocks of two listed companies. Also, this comparison helps in planning and executing strategies for better investments as per the targeted trading returns.

Comparing companies based on their unit share price is less valuable than comparing their market cap. This is due to the fact that the share price fluctuates in a volatile market and may not give the real value of the company. Instead the market cap value gives a better picture to determine the worth of two companies.


Classification of Market Capitalisation stocks

Market cap classification is important because it helps online trading account holders to gauge the company size along with risk and potential of stocks before investing.

  • Nano Cap and Micro Cap

  • Micro Cap has less market cap value than small cap but greater market cap value than nano caps. Also, nano caps are stocks with maximum risk. Online trading account holders should invest in these stocks only after sufficient research due to the risk involved.


  • Small Cap

  • The listed companies with a market cap of Rs. 500 crores or less are part of small cap companies. These are generally, startups or new companies who may have the potential to grow tremendously in the future. But the risk is high if the company fails to grow in the future.


  • Mid Cap

  • Mid cap companies have a market cap between Rs. 500 crores to Rs. 7000 crores. They are growth stage companies with a greater possibility of yielding good returns. These companies are preparing to enter the next level of business. As an online trading account holder, you can buy their stocks, hold it and gain in the long-term.


  • Large Cap

  • Companies with market cap between Rs. 7000 crores and Rs. 20000 crores come under the large cap category. When you buy stocks of these companies using your online trading account, you are taking a comparatively low risk than small and mid cap companies. The risk is low because the large cap companies are generally established in their capabilities to sustain their business.


  • Mega Cap

Companies with more than Rs. 20000 crores in turnover come under the mega cap category. These companies are reputed with local and global brand recognition. Their stocks are sought-after by investors. 

Now, that you know more about Market Cap, you can plan your investment better with the right stocks in your portfolio. If you still haven’t got an online trading account, visit https://www.tradebulls.in/online-trading to open an online trading account with Tradebulls, one of the leading stock marker brokerage companies in India.

Take the discussion on market cap further by sharing your views through comments.

COMMENTS
No Comments Found
leave your comment

ABOUT THE BLOGGERS

Dhruv DesaiDirector Tradebulls

Dhruv Desai joined the Trade bulls Group in the year 2015 as a Director & COO with a responsibility to streamline the broking operations function.

View Full Profile

OUR EXPERT BLOGGERS

636202619765216833_Dinesh_Thakkar_front_Face_100_px_x_100_px.pngDinesh ThakkarChairman & Managing Director
636202618488664609_Aasif_Hirani_front_Face_100_px_x_100_px.pngAasif HiraniDirector Tradebulls
636202618640303853_Dhruv_Desai_front_Face_100_px_x_100_px.pngDhruv DesaiDirector Tradebulls

Categories

Equity14Mutual Fund2Commodity6IPO1Demat Account8Forex1
Open your Demat and Trading Account with Tradebulls

Start Trading in Equity, Commodities and Currency Today!

Submit
  • attention investors
"Prevent Unauthorized transactions in your Trading/Demat Account --> Update your mobile numbers/email IDs with your stock brokers/Depository Participant. Receive alerts/information of your transaction/all debit and other important transactions in your Trading/ Demat Account directly from Exchange/CDSL at the end of the day .......... Issued in the interest of investors." | "KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary." | "No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorize your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account." |"Investment in Securities Market/Commodity Market is subject to Market Risk. | RGESS investors kindly download New Retail Investor Certificate from link - https://www.cdslindia.com/investors/rgessverification.aspx | Dear Investor kindly update Aadhar Number with your demat account, contact your nearest branch."
TRADEBULLS SECURITIES PRIVATE LIMITED
SEBI Registration No : INZ000171838| NSE Member Id-13499| BSE Member ID-3286 | MSEI Member ID-77100 | CDSL Registration No: IN-DP-206-2016 | PMS Reg. No.:INP000005463 | Research Analyst No. INH000004486 | AMFI Reg. No.: ARN-82359 | CIN: U93000DD2009PTC004753
TRADEBULLS COMMODITIES BROKING PRIVATE LIMITED
SEBI Registration No : INZ000079832 | MCX Member ID - 21840 | NCDEX Member ID - 00376 | CIN: U51909DD2004PTC004752
Authorization : Please note that by submitting the above mentioned details, you are authorising us to call & email you even though you may be registered under DNC
Customer Support/ Grievance / Correspondence Office Ahmedabad: Tradebulls House, Sindhubhavan Road, Bodakdev, Ahmedabad, India -380054
Telephone No: +91-079-40001000,+91-079-33333333  | Email: wecare@tradebulls.in
Copyright © 2018 Tradebulls.in
Designed, Developed & Content Powered by   Accord Fintech Pvt. Ltd.