There are many types of stocks based on different parameters . Stocks can be classified according to market capitalization of company ,dividend , fundamentals of company . In this article we are going to see about stocks based on market capitalization . Market capitalization defines size of the company .
As a name shows these stocks have large market value ,they have huge cash reserves and highly profitable . SEBI classifies top 100 stocks on NSE as large cap stocks . This stocks are Blue-chip stocks , they are very safe for investments and gives steadily good return in long term . Besides returns this stocks pay high amount of dividend because they are highly profitable . These stocks are market leaders in their segments . Market cap of large cap stocks is greater than 10000 crores . Safe investors choose this stocks for investment.
Mid caps stocks lies between large cap and small cap stocks . They have market cap greater than small cap and lesser than large cap stocks . According to SEBI stocks between 101-250 are Mid cap stocks . These stocks have market capitalization from 1000 crores to 10000 crores . Mid caps are well established in market , they have enough profits and have potential to be a large cap in future . Mid caps are considered very good for investments ,but also they have risk associated with it . Generally risky investors prefer this stocks for long term.
Stocks which ranks more than 250 in market capitalization are called as Small-Cap stocks. As name suggest this stocks have small market cap . This stocks have market cap less than 1000 crores . Small companies have good profits and revenue . Small caps have huge potential of giving multi bagger returns in long term . But not always they can be loss making sometimes . This stocks do not give much dividend as they spend more profits on their growth. Risky investor should buy this stocks in small proportion.
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