Market Capitalization (Market Cap) is the total market value of a listed company's outstanding equity shares. It is computed as the current share price multiplied by the number of shares outstanding, and represents what the market thinks the company's equity is worth.
Formula: Market Cap = Current Share Price x Total Shares Outstanding
Example: Reliance Industries has approximately 6.77 billion shares outstanding. At a share price of Rs 2,950, Market Cap = 6.77 billion x 2,950 = approx Rs 19.97 lakh crore (around USD 240 billion), making it India's largest listed firm.
SEBI's market-cap-based classification (revised October 2017, used for mutual-fund scheme categorization):
- Large Cap: Top 100 companies by market cap on Indian exchanges
- Mid Cap: Companies ranked 101st to 250th
- Small Cap: All companies ranked 251st and beyond
AMFI publishes the list every six months (end of Jun, end of Dec).
Caveats:
- Market Cap measures equity value only — total enterprise value (EV) adds debt and subtracts cash.
- "Free-float market cap" (used in most index weighting) only counts publicly tradable shares, not promoter / strategic holdings. See Free Float.
- A high market cap does not mean the stock is "expensive" — that is a valuation question, not a size one.
Related: Free Float, Enterprise Value, EPS, P/E Ratio.
Disclaimer: Educational content from MintByte (ARN-314872, MFD). Examples are illustrative. SEBI Investment Adviser registration is in process.