Free float
The part of a company's shares that is actually available for the public to trade.
Free float is the part of a company’s shares that’s actually out there for the public to trade. Big locked-in holdings, such as a promoter’s stake, are left out. Multiply the free-float shares by the share price and you get free-float market capitalisation, which is how the Nifty 50 and Sensex decide how much each company counts.
Questions people ask
What does free float mean?
Free float is the share of a company's stock that is available for the public to buy and sell. Shares held by promoters, the government or other locked-in holders that rarely trade are left out.
Why do indices use free-float market capitalisation?
Because it reflects what investors can actually buy. Weighting by free float stops a company with huge locked-in holdings from dominating an index far beyond its tradable size. Both the Nifty 50 and the Sensex use it.
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