Market capitalisation

Market cap has two uses. The first is obvious: it tells you how big the company is, which decides whether it sits in the large cap, mid cap, or small cap bucket.

The second use is the intuitive filter. Ask yourself: "If I had this much money, would I buy this whole business?" Then compare what the same sum buys elsewhere. Your money is limited, so you are always choosing between companies, and often between industries. Comparing what roughly ₹5 lakh crore buys in soaps, in banking, and in IT services trains the capital allocation instinct that every later ratio depends on.