Stocks in India are classified into three categories based on market capitalisation large-cap, mid-cap, and small-cap. SEBI defines these categories so that fund houses and investors have a common reference point.
Large-cap stocks
These are the top 100 companies by market cap listed on Indian exchanges. Companies like Reliance Industries, TCS, and HDFC Bank fall in this category. Large-cap stocks are generally more stable, have strong track records, and are widely tracked by analysts. They tend to be less volatile but offer moderate growth potential.
Mid-cap stocks
These are companies ranked 101st to 250th by market cap. They are typically growing businesses that have moved past the early stage but are not yet in the large-cap bracket. Mid-cap stocks offer a balance between growth potential and risk higher than large-caps, but lower than small-caps.
Small-cap stocks
These are companies ranked 251st and beyond. Small-cap stocks can offer high growth potential but carry higher risk. They tend to be less liquid, less researched, and more sensitive to market fluctuations.
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