What are large cap, mid cap, and small cap stocks?

What are large-cap stocks?
Large-cap stocks represent well-established and financially stable companies. In India, SEBI defines large-cap companies as those ranking from the 1st to 100th position in terms of total market capitalisation. These companies are typically household names with a strong market presence.

Key characteristics of large-cap stocks:

They have a long history of stability and growth.
Large market share in their respective industries.
Generally offer regular dividends to shareholders.
Known for their low volatility compared to mid and small-cap stocks.
What are mid-cap stocks?
Mid-cap stocks sit between large-cap and small-cap stocks. In India, mid-cap companies are ranked from 101st to 250th in market capitalisation. They are often considered growth stocks because they have already proven themselves but still have significant potential for expansion.

Key characteristics of mid-cap stocks:

These companies are established but not as large as large-cap firms.
They offer growth potential and may evolve into large-cap companies.
Mid-cap stocks tend to be volatile as compared to large-cap stocks but less than small-caps.
Ideal for moderate risk appetite investors.
What are small-cap stocks?
Small-cap stocks refer to companies with lower market capitalisation, typically ranked 251st onwards, according to SEBI. These companies are often in their early stages of growth and can offer high returns, but they come with higher risk and volatility.

Key characteristics of small-cap stocks:

These companies serve niche markets or operate regionally.
They are riskier and experience higher volatility compared to larger companies.
Small-cap stocks have a higher growth potential, making them attractive to aggressive investors.