NEWS – Reliance Industries Limited (RIL) became the first Indian company to surpass Rs 20 lakh crore in market capitalization

MARKET CAPITALIZATION

• Often referred to as market cap
• Measure of the total value of a company’s outstanding shares of stock in the market

The formula for market capitalization is:

Market Cap=Current Market Price per Share×Total Outstanding Shares

Significance

• Key indicator used by investors, analysts, and traders to assess the size and relative importance of a company in the market
• provides an indication of the market’s perception of a company’s value and can be used to compare companies within the same industry or sector

Categories 

1. Large-cap: Companies with a market cap typically greater than $10 billion.
2. Mid-cap: Companies with a market cap between $2 billion and $10 billion.
3. Small-cap: Companies with a market cap below $2 billion.

NOTE – Investors often use market capitalization as part of their investment strategy, considering factors such as risk tolerance, investment goals, and market conditions