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Explore the classifications of stocks based on various factors such as market capitalisation, industry, price behaviour, and investment strategy.
Stocks in the financial market are not all the same. They vary in terms of company size, sector, price volatility, financial health, and investment appeal. Categorising stocks helps investors identify those that align with their investment goals and risk appetite. Whether you are a beginner or looking to refine your stock-picking strategy, understanding how stocks are grouped is essential to building a balanced portfolio.
Market capitalisation is the total market value of a company’s outstanding shares.
Market Capitalisation = Share Price × Number of Outstanding Shares
Companies with high market capitalisation, generally above ₹50,000 Cr. They are often stable, well-established firms with steady returns and lower volatility.
Companies with market capitalisation between ₹10,000 Cr and ₹50,000 Cr. These firms offer higher growth potential but come with slightly higher risk.
Companies with market capitalisation below ₹10,000 Cr. These stocks can offer exponential growth but are typically more volatile and less liquid.
Stocks are also grouped by the industry or sector they operate in.
Financial Services
Information Technology
Pharmaceuticals
FMCG (Fast-Moving Consumer Goods)
Energy and Utilities
Metals and Mining
Sectoral categorisation helps investors diversify and manage industry-specific risks. For example, pharma stocks may do well when healthcare demand rises, while auto stocks may struggle during fuel price hikes.
Stocks are often selected based on the strategy an investor follows.
These are stocks of companies expected to grow at an above-average rate. They typically reinvest profits and offer limited dividends. Suitable for long-term investors seeking capital appreciation.
These are undervalued in the market compared to their intrinsic value. Investors expect prices to eventually rise to reflect the company’s real worth. Common metrics used include low P/E or P/B ratios.
Companies that regularly pay dividends, preferred by investors seeking income. Often found in sectors like utilities, FMCG, and banking.
This classification helps investors choose based on volatility and predictability.
Large-cap companies with stable earnings, strong balance sheets, and consistent performance. Examples include stocks listed in the Nifty 50.
Low-priced stocks with small market capitalisation. They are highly speculative and not suitable for risk-averse investors.
Stocks that perform steadily regardless of economic cycles—typically include essential goods and services. Examples include FMCG and healthcare.
These move with the business cycle—performing well during booms and poorly during downturns. Includes sectors like real estate, auto, and travel.
Stocks may be classified based on whether they are actively traded or recently listed.
These are actively traded on recognised exchanges like NSE or BSE, and their prices are publicly available.
These are newly listed stocks after an Initial Public Offering. Investors watch these closely for listing gains or future performance.
The ownership structure can influence how investors benefit from a stock.
These provide voting rights and the potential for dividends. Most retail investors buy common shares.
These offer fixed dividends and priority in case of liquidation, but often lack voting rights.
The type of company ownership also forms a category.
Stocks of government-owned companies. Often preferred for stability and dividends.
Owned and operated by private entities. Generally have greater growth potential but may be more volatile.
Each classification offers a different lens through which investors can evaluate stocks and create diversified portfolios.
Category Type |
Subcategories |
|---|---|
Market Cap |
Large-Cap, Mid-Cap, Small-Cap |
Sector |
Financials, IT, FMCG, Pharma, etc. |
Investment Style |
Growth, Value, Dividend |
Price Behaviour |
Blue-Chip, Penny, Cyclical, Defensive |
Listing Status |
Listed, IPO |
Ownership Structure |
Common Shares, Preferred Shares |
Ownership Type |
Government (PSU), Private Sector |
Stock categorisation plays a vital role in investment planning. It allows investors to match their choices with their financial goals, risk appetite, and time horizon. By understanding these groupings—based on market size, sector, behaviour, and other factors—investors can create portfolios that are well-structured and aligned with their overall strategy.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Growth stocks focus on future potential and reinvest profits, while value stocks are undervalued based on current fundamentals and may offer dividends.
No. Penny stocks are high-risk and can be volatile. Beginners should approach them with caution.
It reflects the company’s overall market value and helps assess its size and relative stability.
They are usually large-cap, part of major indices like the Nifty 50, and known for consistent performance and returns.
Yes. For example, a stock can be a mid-cap growth stock in the pharma sector and also be part of a sectoral index.
