Large, mid and small cap

SEBI's classification of listed Indian companies by size, used to define what mutual funds may hold. Ranked by full market capitalisation, the 1st to 100th company is large cap, the 101st to 250th mid cap, and the 251st onwards small cap. AMFI publishes the list every six months from average market values.

Because the cut-offs are ranks, a company can change category without its own value changing, simply because others rose past it. A large-cap fund must keep at least 80% of its assets in the top 100, so a company climbing into that list joins the universe of a much larger pool of money at the next review.

Size labels also describe risk. The 150 mid caps and the long tail of small caps are less liquid and more volatile. Their spreads are wider and their research coverage thinner, which is both why they can be mispriced and why exiting them in a falling market is hard.

Check which list a fund is using.