What is Market Capitalisation?
5paisa Research Team
Last Updated: 10 Jun, 2025 04:45 PM IST

Content
- What is Market Capitalisation?
- Market Capitalisation Explained
- How to calculate Market Cap?
- Importance of Market Capitalisation
- Types of Market Capitalisation
- Types of Companies Based on Market Cap
- Market Cap Vs. Share Holder's Equity
- Market Capitalisation investment strategy
- What are the factors which impact Market Caps?
- Other Ways of Evaluating a Company’s Value
- Misconceptions About Market Caps
- What’s a Market Capitalisation-Weighted Index?
- How Market Cap Impacts Stock Prices
- Conclusion
The total market capitalisation of a listed company allows investors to compare the relative size of one company to another, irrespective of geography. Market capitalisation measures a company's value and prospects on the open market, reflecting how much investors are willing to pay for its shares.
This article discusses what market capitalisation is in detail.
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Frequently Asked Questions
Reliance Industries stand at the top with a market cap of INR 1,690,971.27 Crore.
Market capitalization does not affect stock prices. Instead, the market cap is affected by the stock price. Market capitalization is calculated by multiplying the stock price by the number of shares outstanding. Therefore, when stock prices rise, so does market capitalization.
No, the market capitalization, which is determined by examining the price of the stock and the quantity of shares issued, has no bearing on the stock price. A blue-chip firm's higher market capitalization has no direct effect on stock prices, even though it could perform better due to its increased market presence and organizational efficiency.
A firm with a high market capitalization is one that is more well-known in the industry. Bigger businesses might not have as much room for expansion as start-ups, but established businesses might be better able to obtain funding at a lower cost, have a steady flow of income, and benefit from name recognition.
Because it enables prospective investors to understand the underlying worth of businesses and the relative sizes of different companies, market capitalization is important. Since it shows what the market is willing to pay for the shares, it helps investors estimate how the company's stock will do in the future.