Key idea
One number that tells you a company's total size in the market: its share price times how many shares exist.
Market capitalisation (market cap) is the market's price tag for an entire company. The formula is simple, and it is the standard way to measure how big a listed company is.
Market cap = share price × total number of shares
A quick example
| If a company has… | Then |
|---|---|
| Share price | ₹500 |
| Total shares | 20 crore |
| Market cap | ₹10,000 crore |
Why it matters more than share price
A common beginner error is judging a company by its share price alone. A ₹100 share is not "cheaper" than a ₹5,000 share in any meaningful sense; what matters is the total value, the market cap, and what you get for it. Market cap lets you compare companies of very different share prices on the same footing, and it is the basis for sorting them into large, mid, and small caps, which is next.
Finished reading?
Marking this complete counts today, and your streak becomes day 1.