Free float market capitalization is a term used in stock market. The term refers to that proportion of total shares which are actually available for trading in stock market. It means that out of total issued shares, if promoters’ holdings, government holdings and other locked in shares are excluded then remaining shares represent free float market capitalization.
So if put it simply free float market capitalization is the proportion of total shares available for trading to the general public.
Let’s suppose that company XYZ Limited has issued 1, 00,000 shares of INR 10 each. Out of which 10,000 shares are held by promoters and 5,000 shares are held by the government.
Total market capitalization of the company is = INR 10, 00,000 (1, 00,000 × 10)
Total locked in market capitalization is = INR 1, 50,000 (15,000 × 10)