What is the Difference Between Large Cap, Mid Cap, and small-cap stocks
Stocks are classified into large-cap, mid-cap, and small-cap based on their current market capitalization. The market capitalization of a company refers to the total number of its outstanding shares in the market multiplied by the current price per share. It provides the investor with an estimated valuation of the company.
These stocks are leaders in the stock market. These are stocks of well-established companies. The market capitalization of these companies is above Rs 20,000 crore. Large-cap companies are market leaders.
An Indian company with a market capitalization between Rs.5000 crores and Rs.20000 crores are considered as a midcap company. As the name indicates mid-cap company falls in the middle of the pack between large-cap and small-cap companies.
In India, Companies with a market capitalisation less than Rs. 500 Crore is considered as small-cap companies. The stocks issued by such companies are termed as small-cap stocks.
Difference between Large Cap, Mid-cap, small-cap
- Large-cap are big, well-established companies in the equity market. These companies are strong, reputable and trustworthy. Large-cap companies generally are the top 100 companies in a market.
- Mid-cap are compact companies of the equity market, falling somewhere between small and large-cap companies. They are safer than small-cap but riskier than large-cap.
- Small-cap are small companies in the stock market and are all the companies apart from large and mid-cap companies in a market. Stocks of small-cap companies are very risky to invest.
- Large-cap funds have lower growth potential and give investors lower returns on investment as compared to mid and small-cap funds. But they provide high stability in returns on investment.
- Mid-cap funds have better growth potential and give investors higher returns on investment as compared to large-cap funds.
- Small-cap funds have very high growth potential and give high returns on investment to the investors.
- The liquidity of shares of large-cap is very high because they are well-established firms in the market.
- The liquidity of stocks of mid-cap companies is more as compared to small-cap funds.
- The liquidity of stocks of small-cap companies is least.
Available Information about the company
- Information on large-cap companies is known to pubic.
- Information about mid-cap companies is also available to the public but not as much as large-cap.
- Very little information is available about small-cap companies to the public.