• Also known as public float, this refers to the portion of the total outstanding shares of a company that is in the hands of the public and hence available to be freely traded on the market.
• As the promoters of a company generally hold their shares for the long-run, and hence do not engage in daily buying or selling activity, only a portion of a company’s total outstanding shares is usually available for trading on the market.
• The shares of companies with sufficient free float, owing to their availability to buyers, usually exhibit lesser price volatility than companies whose shares are mostly held by a close group of promoters.

Source:TH