Is it time to rethink India’s market cap classifications?
Live MintThe Association of Mutual Funds in India recently released the updated half-yearly data on market capitalization classifications for listed stocks. As defined by the Securities and Exchange Board of India, largecaps are the top 100 companies by market capitalization, midcaps are ranked 101 to 250, and smallcaps are those ranked 251 and beyond. Another alternative could be adopting a dynamic percentile-based approach, where largecaps represent the top 70% of market cap, midcaps the next 20%, and smallcaps the remaining 10%. For instance: Largecaps: Ranks 1-150 Midcaps: Ranks 151-350 Smallcaps: Ranks 351-600 Microcaps: Ranks 601 and beyond These adjustments could provide a more nuanced framework while accommodating the rapid growth of Indian markets. Ultimately, refining market cap classifications should aim to prevent excessive capital from chasing a limited pool of large and midcap stocks as Indian markets grow.