
How Market Cap Categories Have Changed
Over the last two decades, the way we define large cap, mid cap, and small cap stocks in India has changed a lot. Twenty years ago, a large cap stock was one with a market cap above ₹5,000 to ₹6,000 crore. In 2025, the definition is very different. Now, even a small cap stock starts at a market cap of over ₹11,000 crore. This means that the 250th to 500th ranked companies in the Indian stock market are all worth more than ₹11,000 crore.

Massive Growth in Company Sizes
The numbers show how much companies have grown over the years. The minimum size for small cap companies in India has gone up by about 3,400%. For mid cap companies, the increase is around 2,200%. Large cap companies have also grown, with their threshold rising by nearly 1,700%. These huge jumps reflect the rapid market cap growth in India over the last 20 years.
The Fixed Categorization System
The current rules for categorizing stocks are set by the market regulator. The top 100 companies by market cap are called large cap stocks. The next 150 companies, ranked from 101 to 250, are mid cap stocks. Then, the companies ranked from 251 to 500 are small cap stocks. After that, there are micro cap stocks and other smaller categories. This fixed system ensures that every company in the Indian stock market falls into a clear group.
Impact on Investor Behavior
This strict classification may be guiding investor choices more than we realize. Many investors believe that large cap stocks are safer investments, which pushes them towards the top 100 companies. But it is important to remember that what is called a large cap today might have been a mid cap stock just 5 or 10 years ago. Many of those stocks performed strongly, showing that growth opportunities exist across all stock market categories.
A Concentration in Market Baskets
Because of this system, investments can get concentrated in certain “baskets.” At different times, investors may move heavily into one category while ignoring others. While stocks above ₹10,000 crore market cap are usually liquid, well-researched, and in demand, the rigid categorization puts them into inflexible market cap categories. This can also limit fund managers who must stick to a specific group as per their investment strategy.
A Snapshot of Market Evolution
Overall, these changes give a clear picture of the evolution of market caps in India over the last two decades. The shift in market cap thresholds shows how company valuations have multiplied. While the categorization system provides structure, it also shapes investment patterns in ways that may not always reflect the true growth potential across large cap, mid cap, and small cap stocks.