Free Float
The portion of a company's shares that is actually available for public trading, excluding promoter, strategic and locked-in holdings.
Formula
Free Float = Total Shares Outstanding - Promoter Holding - Strategic and Locked-in Holdings
Unit
shares
In depth
Free float is what determines how easily a share can be bought or sold, and it is almost always smaller than the headline share count. A company with 75% promoter holding has only a quarter of its shares in circulation, so ordinary order flow moves the price far more than the company's size would suggest. Indian indices weight constituents by free-float market capitalisation precisely so that index funds are not asked to buy shares that nobody can sell them. Low free float is often mistaken for scarcity value; it more reliably means fragile liquidity in both directions.
Worked example
A company has 20 crore shares outstanding, of which promoters hold 14 crore. Free float = 20 - 14 = 6 crore shares, or 30% of the company. At ₹500 a share, free-float market capitalisation is 6 x 500 = ₹3,000 crore against a full market capitalisation of ₹10,000 crore.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Free Float” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.