Large Cap Stocks in India

What is market capitalisation?

Market capitalisation, or market cap, is the total value the stock market places on a company. It is calculated by multiplying the current share price by the total number of shares the company has issued. A company with 100 crore shares trading at ₹500 has a market cap of ₹50,000 crore.

Market cap tells you the size of a company in the eyes of the market - not how much revenue or profit it makes. It changes every day with the share price.

What are large cap stocks?

Large cap stocks are the biggest listed companies by market cap. In 2017 SEBI, India's market regulator, standardised how mutual funds classify stocks: the 100 largest companies by full market capitalisation are large caps, the next 150 are mid caps, and everything from the 251st company onward is a small cap. AMFI, the mutual fund industry body, publishes the updated list every six months.

Large caps are typically established market leaders - the biggest banks, IT companies, FMCG makers, energy companies and conglomerates - and make up most of the value of indices such as the Nifty 50 and the Sensex.

Why investors hold large cap stocks

Stability

Large companies usually have diversified businesses, strong balance sheets and experienced management, so their earnings tend to be more predictable and their share prices less volatile than smaller companies'.

Liquidity

Large caps trade in high volumes, so you can buy or sell them quickly at close to the quoted price. The gap between buying and selling prices (the bid-ask spread) is small.

Dividends

Many mature large companies return a share of their profits to shareholders as regular dividends.

Information

Large caps are widely tracked by analysts and the media, so information about them is plentiful.

What to keep in mind

Large caps are less risky than smaller companies, not risk-free: they can still fall sharply in a market downturn or when their own business disappoints. Their size also means they usually grow more slowly than smaller companies. Many investors build the core of a long-term portfolio with large caps and add mid and small caps for extra growth.

If you are new to investing, large caps are often a sensible place to start learning - their businesses are easier to understand and follow. You can also get large cap exposure through a large cap mutual fund, which SEBI requires to invest at least 80% of its money in large cap stocks, or through an index fund that tracks the Nifty 50.

How to invest in large cap stocks

1. 1

   Open a demat and trading account

   A demat account holds your shares electronically; a trading account lets you buy and sell them. With GoPocket you can open both online in a few minutes with your PAN, Aadhaar and bank details.

2. 2

   Add money

   Transfer funds to your trading account by UPI or net banking.

3. 3

   Research the company

   Pick a company from the list above and open its page to see its share price chart, financial performance and shareholding before you decide. Compare it with other large cap stocks on business quality, debt, growth and valuation.

4. 4

   Place your order

   Search for the stock in the GoPocket app or web platform, choose the quantity, and place a delivery order to hold the shares in your demat account. A limit order lets you set the most you are willing to pay.

5. 5

   Track and review

   Follow the company's quarterly results and news. Spreading your money across several companies and sectors reduces the damage if one investment goes wrong.

Terms used on this page

LTP

Last traded price - the price at which the stock last changed hands. The figure below it is the change from the previous day's close.

Market cap

Market capitalisation: share price multiplied by the number of shares issued. It measures a company's size in the market and is shown here in rupees crore (1 crore = 1,00,00,000).

Cap band

Whether a company is large, mid, small or micro cap, based on its market capitalisation. Larger companies tend to be less volatile.

Sector and industry

The NSE groups companies into broad sectors (such as Financial Services) and narrower industries within them (such as Banks), based on what they mainly do.

Trading graph

How the share price has moved during the latest trading session, from the 9:15 open to the 3:30 close. The dashed line is the previous day's closing price.