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Key takeaways
In today’s stock market, not all shares are actually available for trading. Understanding which shares truly impact the market can give investors a big advantage.
Free float capital market capitalisation means the total market value of a company’s shares that are freely available for trading in the stock market. It does not include shares held by promoters, government entities, and strategic investors. The reason behind this is that these shares are usually not traded regularly. In other words, it shows how much of the company is actually available for investors to buy and sell in the market.
Let's say a company has 10 million shares, but from it, only 6 million are available for public trading; then the free float calculation will consider only those 6 million shares. With the help of this method, investors can easily understand the real market participation and the liquidity of the stock.
The free float market capitalisation formula is very simple:
Formula: Free Float Market Cap = Share Price * (Outstanding Shares – Restricted Shares)
In the above formula, restricted shares include promoter holdings and strategic investments.
This formula adjusts the total market value by removing shares that are not actively traded
Example
The Free Float Market Cap will be ₹500 × 6 crore = ₹3000 crore. This helps investors clearly understand the actual tradable value of a company and make better and more informed investment decisions in the market.
Most of the beginners are confused between free float vs free float market cap, but both of them have differences between them. In the following table, we have mentioned the differences between them.
It becomes very easy for investors to analyse liquidity and market influence more accurately by understanding the difference between free float and free flow market cap
The free float market cap of HDFC Bank is one of the highest in India because the number of promoters is relatively low and many shares are publicly traded. Example:
4 crore
*T&C Apply
Free Float Portion
HDFC Bank has strong weightage in indices like Nifty 50 because of its large free float value.
The free float market capitalisation NSE list has major companies that are used to calculate index weightage. We have mentioned some large companies with a strong free float presence in the following table:
ndices like Nifty 50 use free float market cap to ensure only actively traded shares influence index weightage.
Bonus Tip
Make sure that whenever you are analysing stocks, always check the free float percentage with the market cap. Stocks with very low free float can become highly volatile, and on the other hand, stocks with higher free float mostly have smoother price movements.
Free float market capitalisation is an important metrics used in modern stock markets.
Investors can easily analyse the companies' influence in the market and make better investment decisions by understanding the free float market capitalisation formula, the difference between free float and free float market cap, and the free float market cap of Nifty 50 companies.
1. What is the difference between free float and free float market cap? (GPT)
Free float represents the number of shares available for public trading, while free float market capitalisation is the total value of those tradable shares calculated using the share price.
To calculate NSE, you have to multiply the share price by the number of free float (shares available for public trading).
3. Total market cap or Free float market cap? (Reddit)
NSE indices use Free Float Market Capitalisation, not total market cap.
4. What's the difference between free float, free float market cap and shares outstanding?
Free float refers to the number of shares available for public trading, while shares outstanding include all shares issued by the company, including promoter holdings. Free float market capitalisation is the total value of only those tradable shares, calculated by multiplying free float shares with the share price.
5. How do I download a free float market cap of Nifty stocks?
You can download free float market cap data from the official National Stock Exchange of India website by visiting the Nifty indices section and downloading the constituents or weightage file, which includes free float details.
