How many small-cap stocks are there?
Investors define them in different ways, but small caps are most commonly defined as stocks with a market cap (the total value of shares held by all shareholders, including company insiders) between $300 million and $2 billion. In December 2021, there were 1,989 small-cap stocks using this definition.
| Stocks | Mkt Cap(CR) | Change |
|---|---|---|
| Jio Financial Services | 230,624.22 | 5.85 |
| Ambuja Cements | 138,211.84 | -6.10 |
| HDFC Life Insurance Company | 133,045.51 | -5.35 |
| Vedanta | 113,915.76 | 8.10 |
Small cap companies
In terms of market cap, these companies generally come in below Rs. 5,000 crores.
The companies ranked from the 251st position onwards in terms of market capitalization are known as small-cap companies. The market cap for these companies is below Rs.5000 crores. The mutual funds that hold stocks from the small-cap are called 'Small-cap funds'. Small-cap companies don't have a long track record.
Small Cap Mutual Funds: Up to 2. Given how high the risk is with these mutual funds, it is best to limit yourself to a limited number of small cap mutual funds. Also, avoid putting in a great percentage of your total mutual fund investment in small cap mutual funds. Debt Funds: Ideally 1, but 2 is also good.
Small-cap stocks are the stocks of companies whose market capitalization is roughly between $300 million and $2 billion.
Large-cap stocks are represented by the S&P 500; mid-cap stocks by the S&P MidCap 400 Index; and small-cap stocks by the S&P SmallCap 600 Index.
By weight, around 80% of this is the S&P 500, with around 15% mid-caps and 5% small-caps. The CRSP is still heavily influenced by the S&P 500, given the large overlap of commonly held large-cap stocks between them.
Large-cap companies have a market value between $10 billion and $200 billion. Mid-cap companies have a market value between $2 billion and $10 billion. Small-cap companies have a market value between $250 million and $2 billion. Micro-cap companies have a market value below $250 million.
Small caps refer to companies with a market capitalization ranging from $300 million to $2 billion. The stocks of small caps are prone to wide market fluctuations; hence, these are highly risky investments.
Should you invest in small-cap stocks?
Small-cap stocks have a long-term performance advantage over large-cap stocks, and this is often referred to as the small-cap effect. Small-cap stocks are said to be economically sensitive and therefore rally in recoveries and lag heading into recessions.
While small caps offer growth potential, they also come with inherent volatility. By spreading your investments across various small-cap stocks and sectors, you reduce the impact of poor performance in any single investment.
Long-Term Investors: Small-cap investments can be volatile in the short run, making them suitable for investors with a time horizon of seven years or more. Over the long duration, small-cap funds have the potential to generate significant returns.
To find an appropriate investment mix for your time horizon, find your age and the corresponding portfolio allocation. A typical mixture could include 60% large-cap (established companies), 20% mid-cap/small-cap (small to medium-sized compa- nies), and 20% international (companies outside the U.S.) stocks.
Equity investments require long-term horizons of preferably 3-5 years. But small-cap equity may require an even longer horizon of 5-7 years to account for periods of high volatility. A longer horizon gives you a much better chance of earning the higher returns you're taking the higher risks for.
| Company | CMP (Rs) | Sales CAGR (3 yrs, %) |
|---|---|---|
| AMANI TRAD | 382.1 | 1,272.2% |
| BRONZE INFRA | 1.0 | 1,119.9% |
| BALU FORGE | 227.4 | 1,070.7% |
| MODERN CONVERTERS | 99.9 | 929.9% |
- Indian Energy Exchange Ltd.
- Central Depository Services (India) Ltd.
- Aptus Value Housing Finance India Limited.
- Five-Star Business Finance Ltd.
- ICICI Securities Ltd.
- Easy Trip Planners Ltd.
- Eris Lifesciences Ltd.
- CE Info Systems Ltd.
- Search for paradigm shifts that are opening up new opportunities. ...
- Invest only when the market opportunity is huge—and quantifiable. ...
- Invest in companies before the institutions notice them. ...
- Invest in stocks that offer both growth and value. ...
- Avoid big losses.
Because the S&P 500 contains hundreds of large companies and represents the lion's share of total stock market value, it is considered a much better gauge of how the market is performing, even though it excludes thousands of smaller and midsize companies.
- 10 Smallest Companies in the S&P500 Index. Business & Books. · ...
- 495. Comerica Inc. ($CMA) ...
- 496. Mohawk Industries Inc. ($MHK) ...
- 497. Organon & Co ($OGN) Sector: Healthcare. ...
- 498. Ralph Lauren Corp ($RL) Sector: Consumer Cyclical. ...
- 499. Zions Bancorp ($ZION) ...
- 500. Fox Corp Class B ($FOX) ...
- 501. Lincoln National Corp ($LNC)
Why small-cap stocks are falling?
The downward trend in small-cap stocks was triggered by concerns raised by market regulator SEBI regarding the froth building up in small-cap and mid-cap segments. This prompted the Association of Mutual Funds in India (AMFI) to instruct mutual funds to conduct stress tests.
We expect earnings to drive the next leg higher for small caps. According to FTSE Russell, analysts anticipate that expected earnings growth among companies in the Russell 2000 will rebound by 28.2% in 2024, after an expected decline of 11.2% in 2023. The timing depends somewhat on the ultimate path of the US economy.
2024 may see a resurgence of small-cap stocks, challenging the recent dominance of large-cap stocks. Small caps are undervalued and well-positioned to capitalize on market trends, experts say.
A shareholder is a person, company, or institution that owns at least one share of a company's stock or in a mutual fund. Shareholders essentially own the company, which comes with certain rights and responsibilities.
Market Cap and Company Size
Large-cap companies typically have a market capitalization of $10 billion or more and represent major players in well-established industries and sectors.1 These companies generally reward investors with a consistent increase in share value and dividend payments.
