What Are Large Cap Stocks?
5paisa Research Team
Last Updated: 23 Aug, 2024 10:37 AM IST
![banner banner](/themes/custom/fivepaisa/images/banner-img.png)
![demat demat](/themes/custom/fivepaisa/images/demat-img.png)
Want to start your Investment Journey?
Content
- Large Cap Stocks
- What do You Mean By Large-Cap Stocks?
- Features of Large-Cap Stocks
- Benefits of Investing in Large-Cap Stocks?
- Alternative Investment Options
- How Can You Invest in Large-Cap Stocks?
- Bottom Line
Large Cap Stocks
In simple terms, large-cap stocks are the respective shares of the biggest companies in the US or those companies that comprise a market capitalisation of $10 billion or more. Large-caps are considered to be much safer and reliable sources of investments compared to small and mid-cap counterparts as these companies are much more settled. That being said, the stocks of these companies might not always offer the same success rate for high returns.
What do You Mean By Large-Cap Stocks?
Cap is a short term for market capitalisation. In a nutshell, it is the calculation of quantifying a corporation’s value through the overall existing shares multiplied by the expense of every unit. Thus, large-cap stocks are nothing but the shares that a company issues with large market capitalisation.
Features of Large-Cap Stocks
Given below are the prime features of large-cap stocks.
Low-risk - Large-cap corporations comprise a much more sturdy and stable financial infrastructure, soundness, and fortitude. Large-cap shares thus have a very low impact when it comes to market volatility. It drastically reduces the risk on such investments, solely because they are independent of risks of dissolution in situations like a market contraction. Moreover, even in such circumstances, they can afford to run the business despite such occurrences.
Moderate-returns - Large-cap corporations are much more structured and established due to which they contain financial stability. This impacts their shares’ value, thereby driving the return on stocks through the dividend component.
Price - Large-cap stocks are generally much more expensive compared to most investment options.
Rich history - Large-cap corporations have a rather comprehensive experience. They comprise a very rich functional history which makes it reliable for the general public to invest in your brand.
Liquid - Large caps are maximal liquid investment options due to their extensive popularity and easily available investors.
Benefits of Investing in Large-Cap Stocks?
Discover below some of the reasons why you should invest in large-cap stocks.
Optimal stability
Large-cap shares provide maximal stability to your respective investment portfolio. There’s a very possibility of a large-cap corporation rendering as inoperative under a prime market crisis. Thus, it can handle the losses that you might suffer to a great extent through additional securities in your portfolio in a situation of a market slump.
A systematic flow of income
The prime source of income that large-cap stocks offer comes from non-capital appreciation and dividends. Thus, while it may not bring substantial capital gains on transfer or sale of the same, you will supposedly get regular dividends. This element can thus balance the lack of regular returns that you might receive from other sorts of securities.
Accessibility of Information
Large-cap corporations are compelled to offer access to their crucial documents like financial statements to the general public. This is not the same with small and mid-cap corporations. The operations and profitability offer a rather extensive viewpoint of the efficiency in a large-cap stocks list. This type of information is pivotal when it comes to sound investment conduct. Thus, you can easily analyse this information against your portfolio for understanding what suits it best.
Alternative Investment Options
Mid-cap stocks - Mid-cap stocks comprise a comparatively better performance. Nonetheless, they are much more volatile and are not reliable when it comes to regular dividends.
Equity Funds - these are a type of mutual funds wherein the pooled investment is utilised for buying equity shares and stocks. They provide returns like stocks whilst lowering the risk factor.
Exchange-traded funds - ETFs are nothing but a form of mutual funds which are traded based on recognised stock exchanges. These funds mainly comprise fixed income securities and shares like debentures, bonds, treasury bills, and so on. ETFs are thus a feasible option when it comes to novice investors as they display stock-like properties and other elements like tax efficiency and low costs.
Multi bagger - Multibaggers are the type of stocks that offer manifold features on the respective employed capital. These investments are recognised for their return in severals of investment amount and low costs. One great example of this is- when the investment returns double the specific investment amount, you term it double bagger.
How Can You Invest in Large-Cap Stocks?
The large-cap market in the US is closely monitored on, as well as, off Wall Street. This suggests that there are ample amounts of information available on individual corporations and even the market altogether. This is extremely beneficial if you’re investing in large-cap shares through your desired brokerage or investment account.
That being said, you must do the necessary research to strike out the bad stock kicks, thereby identifying a much more stringent strategy. Many investors also go for index funds for lowering diversification, minimising legwork, and reducing potential returns.
Bottom Line
No matter what approach you take to invest in large caps, it is extremely important that you do thorough research on every stock or fund prior to noting them down in your portfolio. You can also take advice from qualified financial advisors to learn more in-depth about which stocks may be the right fit for you to invest in. This was everything you needed to know about what large cap stocks are.
More About Stock / Share Market
- Tracking Stock: Overview
- Variable Cost
- Fixed Cost
- Green Portfolio
- Spot Market
- QIP(Qualified Institutional Placement)
- Social Stock Exchange(SSE)
- Financial Statements: A Guide for Investors
- Good Till Cancelled
- Emerging Markets Economy
- Difference Between Stock and Share
- Stock Appreciation Rights(SAR)
- Fundamental Analysis in Stocks
- Growth Stocks
- Difference Between ROCE and ROE
- Markеt Mood Index
- Introduction to Fiduciary
- Guerrilla Trading
- E mini Futures
- Contrarian Investing
- What is PEG Ratio
- How to Buy Unlisted Shares?
- Stock Trading
- Clientele Effect
- Fractional Shares
- Cash Dividends
- Liquidating Dividend
- Stock Dividend
- Scrip Dividend
- Property Dividend
- What is a Brokerage Account?
- What is Sub broker?
- How To Become A Sub Broker?
- What is Broking Firm
- What is Support and Resistance in the Stock Market?
- What is DMA in Stock Market?
- Angel Investors
- Sideways Market
- Committee on Uniform Securities Identification Procedures (CUSIP)
- Bottom Line vs Top Line Growth
- Price-to-Book (PB) Ratio
- What is Stock Margin?
- What is NIFTY?
- What is GTT Order (Good Till Triggered)?
- Mandate Amount
- Bond Market
- Market Order vs Limit Order
- Common Stock vs Preferred Stock
- Difference Between Stocks and Bonds
- Difference Between Bonus Share and Stock Split
- What is Nasdaq?
- What is EV EBITDA?
- What is Dow Jones?
- Foreign Exchange Market
- Advance Decline Ratio (ADR)
- F&O Ban
- What are Upper Circuit and Lower Circuit in Share Market
- Over the Counter Market (OTC)
- Cyclical Stock
- Forfeited Shares
- Sweat Equity
- Pivot Points
- SEBI-Registered Investment Advisor
- Pledging of Shares
- Value Investing
- Diluted EPS
- Max Pain
- Outstanding Shares
- What are Long and Short Positions?
- Joint-Stock Company
- What are Common Stocks?
- What is Venture Capital?
- Golden Rules of Accounting
- Primary Market and Secondary Market
- What Is ADR in Stock Market?
- What Is Hedging?
- What are Asset Classes?
- Value Stocks
- Cash Conversion Cycle
- What Is Operating Profit?
- Global Depository Receipts (GDR)
- Block Deal
- What Is Bear Market?
- How to Transfer PF Online?
- Floating Interest Rate
- Debt Market
- Risk Management in stock Market
- PMS Minimum Investment
- Discounted Cash Flow
- Liquidity Trap
- Blue Chip Stocks: Meaning & Features
- Types of Dividend
- What is Stock Market Index?
- What is Retirement Planning?
- Stock Broker
- What is the Equity Market?
- What is CPR in Trading?
- Technical Analysis of Financial Markets
- Discount Broker
- CE and PE in the Stock Market
- After Market Order
- How to earn 1000 rs per day from the stock market
- Preference Shares
- Share Capital
- Earnings Per Share
- Qualified Institutional Buyers (QIBs)
- What Is the Delisting of Share?
- What Is The ABCD Pattern?
- What is a Contract Note?
- What Are the Types of Investment Banking?
- What are Illiquid stocks?
- What are Perpetual Bonds?
- What is a Deemed Prospectus?
- What is a Freak Trade?
- What is Margin Money?
- What is the Cost of Carry?
- What Are T2T Stocks?
- How to Calculate the Intrinsic Value of a Stock?
- How to Invest in the US Stock Market From India?
- What are NIFTY BeES in India?
- What is Cash Reserve Ratio (CRR)?
- What is Ratio Analysis?
- Preference Shares
- Dividend Yield
- What is Stop Loss in the share market?
- What is an Ex-Dividend Date?
- What is Shorting?
- What is an interim dividend?
- What is Earnings Per Share (EPS)?
- Portfolio Management
- What Is Short Straddle?
- The Intrinsic Value of Shares
- What is market capitalization?
- Employee Stock Ownership Plan (ESOP)
- What is Debt to Equity Ratio?
- What is a stock exchange?
- Capital Markets
- What is EBITDA?
- What is Share Market?
- What is an investment?
- What are bonds?
- What Is a Budget?
- Portfolio
- Learn How To Calculate The Exponential Moving Average (EMA)
- Everything about the Indian VIX
- The Fundamentals of the Volume in Stock Market
- Offer for Sale (OFS)
- Short Covering Explained
- What Is The Efficient Market Hypothesis
- What Is Sunk Cost: Meaning, Definition, and Examples
- What Is Revenue Expenditure? All You Need To Know
- What are operating expenses?
- Return On Equity (ROE)
- What is FII and DII?
- Everything you need to know about the Consumer Price Index
- Everything You Need to Know About Blue Chip Companies
- Know Everything About Bad Banks And How They Function.
- The Essence Of Financial Instruments
- Everything You Need to Know About How to Calculate Dividend per Share
- Double Top Pattern
- Double Bottom Pattern
- What is the Buyback of Shares?
- Trend Analysis
- Stock Split
- Right Issue of Shares
- How To Calculate the Valuation of a Company
- Difference between NSE and BSE
- Learn How to Invest in Share Market Online
- How to Select Stocks for Investing
- Do’s and Don’ts of Stock Market Investing for Beginners
- What is Secondary Market?
- What is Disinvestment?
- How to Become Rich in Stock Market
- 6 Tips to Increase your CIBIL Score and Become Loan-worthy
- 7 Top Credit Rating Agencies in India
- Stock Market Crashes In India
- 5 Best Trading Books
- What Is the Taper Tantrum?
- Tax Basics: Section 24 Of The Income Tax Act
- 9 Read-worthy Share Market Books for Novice Investors
- What is Book Value Per Share
- Stop Loss Trigger Price
- Wealth Builder Guide: Difference Between Savings And Investment
- What is Book Value Per Share
- Top Stock Market Investors In India
- Best Low Price Shares to Buy Today
- How Can I Invest in ETF in India?
- What is ETFs in Stocks?
- Best Investment Strategies in Stock Market for Beginners
- How To Analyse Stocks
- Stock Market Basics: How Share Market Works In India
- Bull Market Vs Bear Market
- Treasury Shares: The Secrets Behind The Big Buybacks
- Minimum Investment In Share Market
- What is Delisting of Shares
- Ace Day Trading With Candlestick Charts - Simple Strategy, High Returns
- How Share Price Increase or Decrease
- How to Pick Stocks in Stock Market?
- Ace Intraday Trading With Seven Backtested Tips
- Are You A Growth Investor? Check These Tips to Increase Your Profits
- What Can You Learn From The Warren Buffet Style of Trading
- Value or Growth - Which Investment Style Can be the Best For You?
- Find Why Momentum Investing is Trending Nowadays
- Use Investment Quotes to Improve Your Investment Strategy
- What is Dollar Cost Averaging
- Fundamental Analysis vs Technical Analysis
- Sovereign Gold Bonds
- A Comprehensive Guide To Learn How to Invest In Nifty In India
- What is IOC in Share Market
- Know All About Stop Limit Orders And Use Them To Your Benefit
- What is Scalp Trading?
- What is Paper Trading?
- Difference Between Shares and Debentures
- What is LTP in the Share Market?
- What is Face Value of Share?
- What is PE Ratio?
- What is Primary Market?
- Understanding the Difference between Equity and Preference Shares
- Share Market Basics
- How to Choose Stocks for Intraday Trading?
- What is Intraday Trading?
- How Share Market Works In India?
- What is Scalp Trading?
- What are Multibagger Stocks?
- What are Equities?
- What is a Bracket Order?
- What Are Large Cap Stocks?
- A Kickstarter Course: How To Invest In Share Market
- What are Penny Stocks?
- What are Shares?
- What Are Midcap Stocks?
- Beginner's Guide: How to Invest in the Share Market Successfully Read More
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Open Free Demat Account
Be a part of 5paisa community - The first listed discount broker of India.