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June 14, 2026
The Dispatch

Definition

Large Cap / Mid Cap / Small Cap

These categories classify stocks by market capitalisation, with large caps the biggest and most stable, and small caps the smallest and riskiest.

SEBI defines the buckets by ranking all listed companies by market cap: the top 100 are large caps, the next 150 (ranks 101-250) are mid caps, and everything beyond rank 250 is small cap. This classification, revised twice a year, governs how mutual funds are categorised.

Large caps offer stability and liquidity; mid and small caps offer higher growth potential but with greater volatility, lower liquidity, and higher risk. Many investors blend all three (often via flexi-cap or multi-cap funds) to balance growth and safety.

Related terms

  • Market CapitalizationMarket capitalisation is the total market value of a company's shares, calculated as share price multiplied by the number of shares outstanding.
  • Free FloatFree float is the portion of a company's shares that is freely available for trading by the public, excluding locked or strategic holdings.
  • LiquidityLiquidity is how easily an asset can be bought or sold quickly without significantly moving its price.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.