WHAT IS MEANT BY MARKET CAPITALISATION?

 Market capitalization, often referred to as market cap, is a measure of the total value of a publicly traded company. It represents the market value of a company's outstanding shares of stock. Market cap is calculated by multiplying the company's current share price by the total number of its outstanding shares.

Market capitalization is an important metric for investors and analysts as it provides an indication of a company's size and its relative position in the market. It is widely used to categorize companies into different groups, such as large-cap, mid-cap, and small-cap.

Here are the commonly used categories based on market capitalization:

1-Large-Cap: Companies with a market cap generally exceeding $10 billion are considered large-cap. These are typically well-established, financially stable companies with a significant presence in their respective industries. Examples include Apple, Microsoft, and Amazon.

2-Mid-Cap: Mid-cap companies have a market cap between $2 billion and $10 billion. They are often in a phase of growth and expansion, with potential for further development. Examples include Airbnb, Zoom Video Communications, and Chipotle Mexican Grill.

3-Small-Cap: Small-cap companies have a market cap between $300 million and $2 billion. They are generally younger companies with potential for rapid growth but may also carry higher risk. Examples include Roku, Etsy, and Wayfair.

4-Micro-Cap: Micro-cap companies have a market cap below $300 million. These companies are often early-stage startups or smaller, niche businesses. They can be more volatile and have higher investment risk due to their size and limited resources.

Market capitalization is not the only metric to evaluate a company, as other factors like revenue, profitability, and growth prospects also play a crucial role. However, market cap provides a useful snapshot of a company's overall value in the stock market and is widely used as a reference point for investors and analysts when comparing companies or constructing investment portfolios.

The market value of a quoted company, which is calculated by multiplying its current share price (market price) by the number of shares in issue is called as market capitalization. E.g. Company A has 120 million shares in issue. The current market price is Rs. 100. The market capitalisation of company A is Rs. 12000 million.