Free Float refers to the number of shares available for public trading, excluding shares held by promoters, insiders, founders, government, or long-term strategic investors.
🔍 Why Free Float Matters?
• High Free Float → Stable price, smoother movements
• Low Free Float → High volatility, sharp spikes/drops
• Influences liquidity, price discovery, and market depth
• Major index providers (Nifty, Sensex) use free-float market cap for index weightage
🧮 Formula:
Free Float = Total Shares – Promoter/Locked-in Shares
⚠️ Important Insight:
Stocks with very low float can be easily manipulated (operators, circuits).
Long-term investors prefer reasonable float with stable volume.
Post a Comment