Market Related Concepts
You will frequently come across terms like Market Capitalization, Small-Cap Stocks, Mid-Cap Stocks and Large-Cap Stocks. Understanding of what these terms mean in the context of stock markets.
MARKET CAPITALIZATION
"Cap" is short for capitalization, the market value of a stock, indicating the size of the stock available.Calculating a stock's capitalization
Market Capitalization = Market Price of the stock x The number of the stock's outstanding* sharesOutstanding means the shares held by the public Say, if Stock X has a Current Market Price of Rs 200 per share, and there are 1,00,00 shares in the hands of public investors, then Stock A has a capitalization of 20,00,000.The company's capitalization is an effective parameter to group corporate stocks. In the US, mid-cap shares are those stocks that have a market capitalization ranging from Rs 9,000 crore to Rs 45,000 crore. In India, these shares would be classified as large-cap shares.
Thus, classification of shares into large-cap, mid-cap, small-cap is made on the basis of the relative size of the market in that particular country. The total market capitalization of US markets is $15 trillion. In India, the market capitalization of listed companies is around $600bn.
Sunday, April 5, 2009
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