What is Free-Float Market Cap?

Let's understand **What is Market Capitalization?** Simply, (Total Shares × Current Share Price). For example, if a company has 1 lakh (100,000) shares priced at ₹100 each, its market cap is ₹1 crore (₹100 × 1,00,000). **What is Free-Float Market Cap?** Not all shares are available for public trading. Promoters, institutions, or locked-in investors hold some. The free-float market cap only considers shares available for trading by the public. Free-Float Market Cap = *(Total Shares – Locked Shares) × Share Price* Let’s say Reliance Industries has: Total Shares: 1 crore (10,000,000) * Promoters (Ambani family) hold: 40% (40 lakh shares) * Institutions: 10% (10 lakh shares) * Publicly Traded (Free-Float): 50% (50 lakh shares) If Reliance’s share price is ₹2,500: * Total Market Cap = 1 crore × ₹2,500 = ₹2,500 crore * Free-Float Market Cap = 50 lakh × ₹2,500 = ₹1,250 crore **Why does this matter to the investor?** 1. Free-float reflects actual market demand. A ₹1 lakh crore company with 20% free-float (₹20,000 cr traded) is priced more accurately than one with 5% free-float (₹5,000 cr traded). 2. Low free-float stocks are prone to sharp price spikes/drops. Typical "pump-and-dump" schemes. 3. High free-float = more shares available to trade. Retailers can buy/sell easily without huge price swings. https://preview.redd.it/5ei2sw7911ie1.png?width=1280&format=png&auto=webp&s=f13ccc76cd2305b9d35dc2c8de4017c5dc35debf