Free float: The market's missing factor

India’s capital markets have grown in step with its economy, expanding from 70 per cent of gross domestic product (GDP) in 2012 to 105 per cent at present. That financial development is inextricably linked to economic growth is a stylised fact. Consequently, the ambition of becoming the third-largest global economy by 2027 warrants a vibrant equity market, notably one that is highly liquid. Liquidity in markets aids price discovery and mitigates the risk of price rigging. Better price discovery translates into a more accurate estimate of a company’s market capitalisation.

Measures taken by the Securities and Exchange Board of India (Sebi)

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