Free-Float Market Capitalisation
The market value of only those shares available for public trading, used to weight constituents in Indian indices.
Formula
Free-Float Market Capitalisation = Market Price x Free Float Shares
Unit
₹ crore
In depth
Both the Nifty 50 and the Sensex weight their members by free-float market capitalisation rather than full market capitalisation, because an index fund can only buy shares that are actually for sale. The practical consequence is that a very large company with a very high promoter stake carries less index weight than its size implies. When a promoter sells down, free float rises and index weight rises with it, generating mechanical buying from index funds. Reading index weights as a ranking of company size is therefore wrong — they are a ranking of tradable equity value.
Worked example
Company A: market capitalisation ₹10,000 crore with 30% free float, giving ₹3,000 crore of index-eligible value. Company B: ₹8,000 crore with 60% free float, giving ₹4,800 crore. Company B carries the larger index weight despite being the smaller company.
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 Market Capitalisation” 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.