What is free float, and what is the 25% public shareholding rule?

Two companies of identical total market value can have very different floats: one with promoters at 75% trades on a quarter of its shares, one with no promoter trades on nearly all of them. The smaller the float, the more a given amount of buying or selling moves the price — low-float stocks are structurally more volatile in both directions.

This is also why index providers weight by free-float market capitalisation rather than full market cap: an index is meant to be investable, and weighting a company by shares nobody can buy would misstate what the market can actually hold. A company’s float you can read directly off its shareholding pattern — everything outside the promoter and locked-in categories.

Indian securities rules require every listed company to maintain minimum public shareholding of 25% — the reason promoter holding tops out at 75% in shareholding data. Newly listed companies get time-bound glide paths to reach compliance, and public-sector companies have periodically received exemptions, which is why a handful of PSUs show promoter (government) holdings above 75%.

The rule shapes corporate actions: a promoter at 75% who wants the stock to stay listed cannot buy more, and companies above the line must sell down — through offers for sale, QIPs or other prescribed routes — which is one of the recurring supply events visible in deal data.