What are large-Cap Stocks
The term ‘cap’ is defined as the market capitalisation. A company’s market capitalization is an important characteristic in the financial market for a company. Large cap refers to a company with a market capitalization value is greater than Rs.20,000 crore. Large cap is also known as the “big cap” which describes a class of popular stocks preferred by investors for their stable portfolio.
How to calculate market capitalization of a company?
To calculate the market capitalization of a company, multiply the total outstanding shares number by the share price of the stock.
When investors select their stocks, they must decide the risk and reward ratio. Large cap stocks usually belong to the large, well-established companies and are safer investments than the small-or mid cap stocks. Experts recommend that investors hold a mix large, small and mid-cap stocks for diversified portfolios.
Features of Large Cap stocks
We have mentioned some of the features of the large cap stocks are given below-
• Moderate-returns- Large-cap companies are well-established and have the strong financial value in the market. Returns on such stocks are mainly comes from the dividend components.
• Low Risk- Large-cap companies have a robust financial infrastructure and large-scale financial market. Large cap stocks react less to market volatility. It significantly lowers the risk on investment because unlike mis cap and small-cap companies, they do not run the risk of dissolution during market contraction and still continue in business operations.
• Rich history- Companies in large cap stocks lists have been in business for a longer period than small or mid cap stocks. They possess a rich operational history accessible to the general public through various modes which can be used by potential investors for analysis.
• Expensive- Large cap stocks are more expensive than the other investment stocks.
• Liquid- Large cap stocks are the most liquid investment options in the market because of their widespread popularity and enough numbers of buyers and sellers.
Why should you Invest in Large-cap stocks?
Here we have described some of the reasons-why you should include large-cap stocks in your investment portfolio.
• Stability- Large-cap shares offer more stability to investment to create a diversify portfolio. It is highly unlikely that a large-cap company will be inoperative by a bearish market or during a significant market crisis.
• Availability of Information- Large cap companies provide more access to their financial statements and necessary documents to the general public than the small and mid-cap stocks. Their probability and operations thus provide a comprehensive view of their performance in a large-cap stock list by which you can access this information against your portfolio management.
If you do not have an account, you can open your account in any of these stock brokers.
To open your account in Zerodha
To open your account in Angel Broking
To open your account in Alice Blue
Also read: What are Mid-Cap Stocks