Market Cap or Market Capitalisation is the total current value of a company listed on the stock market.
The total number of shares multiplied by current stock price is equal to market capitalisation.
Simple Example: If the total number of shares issued by a company is 100 and the share price is ₹ 50. Then the total market cap is 100 x 50 = ₹ 5000.
Real Example: The total number of shares of Reliance Industries is 6,33,92,03,530 (633 crore). The share price today is ₹ 1526. When the two figures are multiplied, it gives the total market cap.
The total market cap of Reliance Industries is ₹ 9,67,624 crore!
The market cap changes every second during market hours because the stock price keeps changing too. If the stock price of Reliance rises by one rupee, i.e from 1526 to 1527, the market cap will rise by 633 crore!
Because the number of shares issued by large companies like Reliance Industries is huge, the calculation becomes big. Otherwise, the concept of market cap is very easy to understand.
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