What is Market Capitalization? Stock Market For Beginners [Hindi]

What is Market Capitalization? Stock Market For Beginners [Hindi]
In this video by FinCalC TV, we will see what is market capitalization or market cap in short in hindi, and why it is important to check market cap while selecting and analyzing stocks. Market cap is categorized into 3 groups - large cap, mid cap and small cap stocks.
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WHAT IS MARKET CAPITALIZATION?
- Market Capitalization provides us the information about how much a company is worth in terms of stock market
- Based on the supply and demand of the stocks of the company, the Market Ca of the company can be calculated
- Since Market Cap is the product of current stock price and the total number of shares of the company, when the demand is high, investors take the stock price high to increase the Market Cap of the company
- When the growth prospects of the company looks low, the investors sell the shares to get stock prices down thus decreasing the Market Cap of the company
- Market Capitalization alone should not be the only factor to analyze stocks and compare them with similar companies in same industry
- Enterprise value which also considers the company’s total debt and cash equivalents is the better way to find company’s worth during acquisitions or mergers
MARKET CAPITALIZATION FORMULA
As mentioned above below is the formula to calculate Market Capitalization of a company:
Market Capitalization = Current Stock price * Total number of shares
EXAMPLES OF COMPANIES WITH HIGH MARKET CAPITALIZATION
Below are the examples of companies with high Market Capitalization in India, as of writing of this article:
Reliance Industries Ltd
Tata Consultancy Services Ltd
HDFC Bank Ltd
ICICI Bank Ltd
State Bank of India
Infosys Ltd
Bharti Airtel Ltd
Life Insurance Corporation Of India
Hindustan Unilever Ltd
Itc Ltd
MARKET CAPITALIZATION CATEGORIES
There are 3 categories of companies based on Market Capitalization:
Large Cap: These companies usually have the market cap of Rs. 20,000 crore or above. They are the top 100 companies in India based on Market Cap
Mid Cap: Usually they have the market cap between Rs. 5000 crore to Rs. 20,000 crore. They are ranked between 101 to 250 in terms of market cap
Small Cap: These companies usually have market cap of below Rs. 5000 crore. They are ranked 251 and above in terms of market cap
MARKET CAPITALIZATION MISCONCEPTIONS
There are certain misconceptions about market cap:
A company might have double market cap but that does not mean it’s revenue or profits will also double every time when you compare other companies in same industry
Market cap does not measure the equity value of the company, a better metric would be enterprise value while calculating the actual worth of company
It is calculated based on current stock price of the company which can go up and down based on market sentiments, so it does not accurately reflect the business worth
#MarketCap #StockMarket #Beginners #ShareMarket #Investing #FinCalCTV
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DISCLAIMER:
Examples and demo used are for Illustration purpose only and might not cover every detail of examples shown.
I Am Not A SEBI Registered Adviser. All The Information Provided By Me Are For Educational/Informational Purposes Only. We Do Not Take Any Responsibility For The Accuracy Of The Data But As It May Contain Typographic Or Other Errors And Inaccuracies And We Expressly Disclaim Liability For Any Errors On The KZbin Channel (FinCalC TV). Please consult your Financial Advisor before taking any decision or action in terms of your Finances.