Free-float market capitalization is a company’s market cap calculated using only the shares actually available for public trading — excluding shares held by promoters, the government, or other strategic holders that aren’t readily traded. It gives a more accurate picture of what’s actually tradable in the market.
Why It Matters
Both Nifty 50 and Sensex use free-float market capitalization to weight their constituent companies, meaning companies with a larger pool of publicly tradable shares have a greater influence on the index’s movement.
Related Reading
See how this weighting affects index movement in Stock Market Indices Explained: Nifty 50, Sensex, and Bank Nifty.