Free float
Also called: public float
The shares of a company that are freely available for trading, excluding blocks held by promoters and other long-term strategic holders.
Not every share of a company is likely to be traded. Promoters and strategic investors often hold large blocks for the long term. The free float is the rest: the shares held by the public that realistically change hands.
Index providers use free-float market capitalisation to weight companies, so that an index reflects the value investors can actually buy.
Example
A company has 100 crore shares, of which promoters hold 60 crore. Its free float is 40 crore shares, or 40%. At ₹200 a share, its full market cap is ₹20,000 crore and its free-float market cap is ₹8,000 crore.
Learn more in these lessons
- Nifty 50 and SensexWhat do the Nifty 50 and Sensex measure?
- Market capitalisationWhat is market capitalisation and how is it calculated?
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