Is it correct to say(grammatically)

"I have lost my pen's cap"Explain please

Grammatically, pen's cap sounds correct as it shows that the cap belongs to the pen, and there is no such rule that makes this phrase invalid. However, British English reserves the use of apostrophe largely to animate objects. Therefore, in general usage, pen cap is sufficient to convey the same meaning.

So, you can say it as: 

* I have lost my pen cap.

or

* I have lost the cap of my pen.