Large Cap, Mid Cap, Small Cap: The Difference

Large Caps are big companies with large market capitalisation.

Small Caps are small companies with small market capitalisation.

Mid Caps are companies that come right in between. They are neither large nor small – they are medium-sized companies with medium market capitalisation.

That’s the basic difference between Large Cap, Mid Cap and Small Cap.

But until October 2017, there was a problem. Most investors and mutual funds couldn’t clearly differentiate between the different caps.

In an initiative to clearly differentiate between large, mid and small caps – SEBI (Securities and Exchange Board of India) released a circular to define each of the three categories.

• Large Caps: Top 100 companies in terms of market capitalisation.
• Mid Caps: 101 to 250 companies in terms of market capitalisation.
• Small Caps: 251 onwards.

Since market capitalisation changes constantly due to fluctuation in stock prices, the 6-month average will be taken and the list of large – mid – small caps will be updated twice a year.

The average market capitalisation between January to June will be calculated and released in July. The average will be taken again for the second half of the year (July to December) and released in January.

For example, the average market capitalisation of the Top 5 companies are as follows.

In the table above, the average market capitalisation of Reliance Industries between the period of July to December 2019 was calculated and released on January 5th this year. The average of Reliance was the highest, hence it’s the biggest company in India today.

In the same way, the average market cap of all companies listed on NSE and BSE is calculated. The Top 100 companies become large caps. 101 to 250 become mid caps. 251 and below become small caps.

Currently, there are 4992 listed companies. So all companies between 251 and 4992 are small caps.

If you have any questions related to large / mid / small caps – post them in the comments section below.