Small-Cap
stocks means those stocks with a small market
capitalisation. Market capitalisation means the market value of all shares
((outstanding) of a company.
There
is no single, precise definition of small
cap. It varies from country to country as well as between various
brokerages within the same country.
For
example, as per Investopedia a
company that has a market cap of US$ 300 million to 2.00 billion (approximately
Rs.1800 – 12000 Crores). However, the
Economic Times, the popular financial newspaper in India, defines small cap as
a company having market cap of less than Rs.2000 crores.
Let
us examine how the Bombay Stock Exchange (BSE) deals with the subject. BSE
Small Cap Index comprises of small cap companies listed on the BSE. The small
cap companies constituting the index and occupying the top five ranking and
weight are as follows with market cap of quite different sizes:
In conclusion
small cap stocks means those stocks with small market capitalization or market
cap. There is no precise definition for what actually constitutes small, though.
