What is market capitalization? Understanding how company value is calculated in India with examples
In simple words, market capitalization is the total value of all outstanding shares of a publicly traded company.
It shows how much the stock market values the company at a particular point in time. How is market capitalization calculated?
The formula is very simple:
Market Capitalization = Current Share Price × Total Number of Outstanding Shares
For example:
If a company has 10 crore shares outstanding and the current share price is Rs 100,
its market capitalization will be:
10 crore × Rs 100 = Rs 1,000 crore Types of market cap categories (India context):
Large-cap companies:
Typically companies with a market cap above Rs 50,000 crore.
Example: Reliance Industries, HDFC Bank
Mid-cap companies:
Companies with a market cap between Rs 10,000 crore to Rs 50,000 crore.
Example: Tata Power, MRF Tyres
Small-cap companies:
Companies with a market cap below Rs 10,000 crore.
Example: BEML, HEG Ltd Why does market cap matter for investors? Risk assessment:
Large-cap companies are generally considered safer and more stable. Small-caps may offer higher growth potential but with more risk.
Index weightage:
Indices like Nifty 50 and Sensex are driven by market cap-weighted companies. Larger the company, higher the impact on index movement.
Investment decisions:
Mutual funds, FIIs, and retail investors often use market cap as a filter while selecting stocks. Example from the Indian stock market:
As of June 2025: Reliance Industries market cap: Around Rs 19 lakh crore
Infosys: Approximately Rs 6.5 lakh crore
Zomato: Approximately Rs 1 lakh crore Quick summary:
If you want to know how big and valuable a company is in the stock market, market capitalization is the easiest number to check.
It helps classify companies into large-cap, mid-cap, or small-cap and is widely used for investment, risk analysis, and index composition decisions.
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Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
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