Learn · Track 2: How the PSX works · lesson 4 of 9 · Beginner
Free float on PSX: what it is and why it matters
Free float is the share of a company's stock available to trade. PSX uses it to weight the KSE-100. FFC's is 55%, Ibrahim Fibres' is 5%.
Free float (free float kya hota hai) is the part of a company’s shares that is readily available for trading on the exchange. PSX’s KSE-100 brochure defines it as the proportion of total shares issued that can be traded in the normal course, and it excludes shares held by controlling directors, sponsors, promoters, the government and other locked-in holders. PSX weights the KSE-100 by free-float market capitalisation, not by total market capitalisation. In the SuperX snapshot as of 9 October 2026, Fauji Fertilizer (FFC) has a free float of 55% and Ibrahim Fibres (IBFL) has 5%.
What is free float?
A company has a number of shares in issue. Only some of them are in the hands of people who might sell them tomorrow. The rest sit with the founding family, the parent company, the government or a strategic partner who does not plan to trade. Free float is the first group.
Free float % = free-float shares ÷ total shares issued × 100
Free float is a count of shares, and the percentage is how large that count is against the total. It is not the same as market capitalisation. Market cap vs share price covers total market cap. Free-float market cap is the same idea applied to the floating shares only: free-float shares multiplied by the price.
How does PSX calculate free float?
The PSX KSE-100 index brochure sets out the method. These are the points that matter to an investor, taken from the brochure:
- What is subtracted. From total outstanding shares, PSX subtracts shares held by directors and sponsors, government holdings as promoter, acquirer or controller, shares held by associated companies (cross-holdings), and shares held by the general public in physical form.
- A ceiling. The free float of a stock cannot exceed its book-entry shares in the Central Depository System.
- Who supplies the data. Listed companies submit their pattern of shareholding to the exchange, and the exchange determines each company’s free-float factor.
- Bands. The free float is rounded up to the next multiple of 5 and placed in one of 20 bands. The factor applied to the company’s market cap is the band’s upper edge.
| Free float | Factor applied |
|---|---|
| Above 0% to 5% | 0.05 |
| Above 5% to 10% | 0.10 |
| Above 50% to 55% | 0.55 |
| Above 95% to 100% | 1.00 |
The brochure lists all 20 bands in steps of 5%. The four rows above are the first two, one in the middle and the last. The brochure also says free float can be used by the exchange for regulatory purposes, such as risk management and market surveillance.
SuperX shows a free-float percentage on each company page. The percentages below come from the SuperX company data, as of 9 October 2026, and were not checked against PSX’s banded factors. For the official figure, check the company’s filings and PSX.
How does free float shape the KSE-100?
The brochure gives the index formula: the sum of free-float shares multiplied by current price, divided by the base-period value and multiplied by 1,000. A company with few free shares therefore gets a small weight, whatever its total size. The brochure states the goal: weights follow “actual liquidity in the market” so that the index is “not unduly influenced by tightly held large-cap companies”.
The brochure also says 100 companies are selected by sector representation and largest free-float capitalisation, and that the index is recomposed twice a year. What is the KSE-100 index? and the KSE-100 heavyweights post show the result for today’s top names.
The two real examples below show the effect.
| As of 9 Oct 2026 | FFC | IBFL |
|---|---|---|
| Free float % | 55% | 5% |
| Shares issued | 1,439,023,262 | 310,506,995 |
| Free-float shares | 791,462,794 | 15,525,350 |
| Total market cap | Rs 769.7 billion | Rs 78.2 billion |
| Free-float market cap | Rs 423.3 billion | Rs 3.9 billion |
| KSE-100 weight | 8.97% | 0.08% |
IBFL’s total market cap is about 10% of FFC’s (78.2 ÷ 769.7). Its KSE-100 weight is under 1% of FFC’s (0.08 ÷ 8.97). The gap between the two ratios is the free-float adjustment. The full list of weights is on the KSE-100 constituents page.
Why do low-float stocks move on small volume?
A price moves when buyers and sellers cannot match at the last price. In a stock with a large float, many holders are ready to sell at close to the current price, so a big order meets a deep queue. In a stock with a small float, the queue is short. A modest order uses up the sellers near the price and the next trade prints higher.
Free float does not set liquidity alone. Trading volume matters as well. K-Electric (KEL) has a free float of 10% in the snapshot, yet its 30-day average volume is 20.3 million shares a day, which is 0.73% of its free float each day. IBFL, at 5%, averages 1,437 shares a day (0.009% of its float per day). A small float sets the ceiling on supply. The volume shows how much of that supply is actually offered.
A real case from the snapshot shows the mechanics. IBFL rose from a close of Rs 224.27 on 1 July 2026 to Rs 361.20 on 8 July 2026, a gain of 61.1% in five sessions. Each of the five sessions closed 10.0% higher, which is the daily price limit.
| Session | IBFL close | Shares traded | Value traded |
|---|---|---|---|
| 2 Jul 2026 | Rs 246.70 | 6,982 | Rs 1.72 million |
| 3 Jul 2026 | Rs 271.37 | 2,970 | Rs 0.81 million |
| 6 Jul 2026 | Rs 298.51 | 1,803 | Rs 0.54 million |
| 7 Jul 2026 | Rs 328.36 | 4,470 | Rs 1.47 million |
| 8 Jul 2026 | Rs 361.20 | 20,862 | Rs 7.54 million |
| Total | 37,087 | Rs 12.07 million |
Over those five sessions, 37,087 shares traded. That is 0.24% of IBFL’s 15,525,350 free-float shares. The total value traded was Rs 12.07 million.
Compare a limit-up session in the large-float example. On 8 April 2026, FFC closed 10.0% higher at Rs 541.49 on 4,974,951 shares, about Rs 2.69 billion of value. IBFL’s +10.0% session on 6 July 2026 took Rs 0.54 million. The FFC session needed about 5,000 times the money.
The snapshot holds no filing or news that explains the IBFL move, and this post does not offer a cause. It shows what a price move can cost in rupees when the float is small. The exchange’s price band is the reason each day’s gain stopped at 10.0%. The circuit breakers post explains the bands.
What does a small float mean for a retail investor?
These are facts to check, not a rule to follow:
- Wider swings. The snapshot’s 90-day volatility figure is 58.4% for IBFL and 16.4% for FFC.
- Small orders matter. In a thin stock, your own order can move the price you get. A limit order sets the worst price you accept.
- Exits. Selling meets the same thin queue as buying. IBFL’s 30-day average volume of 1,437 shares is the size of a small holding.
Check the free float and the typical daily volume together before you size a position.
Frequently asked questions
What does free float mean in simple terms?
Free float is the part of a company’s shares that investors can trade freely. It leaves out shares held by sponsors, directors, the government and other locked-in holders.
What is a good free float percentage?
There is no fixed good figure. A higher float means more shares are available to trade, but volume still matters. In the snapshot, FFC (55%) has a median daily traded value of Rs 357.2 million over 60 days, against Rs 0.10 million for IBFL (5%).
Does PSX use free float or market cap for the KSE-100?
PSX uses free-float market capitalisation for both selecting and weighting the KSE-100, according to its index brochure. Total market cap alone does not set a company’s weight.
Where can I see a company’s free float?
Each stock page on SuperX shows a Free float tile with the share count and the percentage of shares issued, such as FFC and IBFL. The official source is the company’s shareholding pattern filed with PSX.
Is a low free float a reason to avoid a stock?
Free float alone does not decide that. It tells you how much stock is available to trade. Read it with volume, price limits and the company’s results.
Try it
Open any company on SuperX and read the Free float tile with the volume figures on the same page. Start with Fauji Fertilizer (FFC) at 55% and Ibrahim Fibres (IBFL) at 5%, and compare the two. Each page shows free-float shares and percentage of shares issued, as of the last snapshot.
Education, not investment advice.
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