Checking of Market Capitalisation before buying a stock !
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Before investing in any stock, we should be very clear about our Financial Goal, Expectation of Return and Risk Appetite. Understanding of Market Capitalisation of stock or share is very much essential. What is Market Capitalisation ? It is the value of a company that is traded on stock market and calculated by multiplying the total number of shares by the present share price. Stocks are classified according to their Market Capitalisation ( or cap) as given below.. Large Cap Stocks Mid Cap Stocks Small Cap stocks Large Cap stocks : Stocks which have market cap of more than roughly 20 Thousand Crore are Large Cap stocks. These stocks are generally from large companies which are well-established in market. These are are generally safe to invest as the risk factor is minimum. Return on investment is generally lower in this type of stocks. Large Cap stocks which has market cap of more than roughly 75 Thousand Crore, are called Giant of the market.