Chapter 3 · Stock Market Basics
Market capitalisation, float and liquidity
How big a company is, how much of it can actually be traded, and why the second number matters more.
7 of 66 · 9 min
| Measure | Formula |
|---|---|
| Market capitalisation | Price × Total shares outstanding |
| Free float | Shares available to the public (excludes locked promoter holdings) |
| Free float market cap | Price × Free float shares |
Worked example
A company has 1,00,00,000 shares at Rs 400. Promoters hold 51% under lock-in.
- Market cap = 400 × 1,00,00,000 = Rs 400 crore
- Free float = 49,00,000 shares → Rs 196 crore
- Less than half the company is actually buyable. A large order competes for that half, not the whole.
Listing, delisting, tick and lot
- Listing — the company's shares become tradable on the exchange.
- Delisting — they stop being tradable. Voluntary or enforced; either way your holding becomes very hard to sell.
- Tick size — the smallest price increment an order may use.
- Lot size — the minimum tradable quantity. Relevant mainly in the primary market in Nepal.
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