Are there any significant capital flow indicators for Indian stocks?
8/3/2025 12:18am
Yes, there are several significant capital flow indicators for Indian stocks:
1. **Foreign Portfolio Investment (FPI)**: FPI is a key indicator of capital flow into Indian stocks. As of the latest data, FPIs held 16.9% of the total outstanding equity of companies listed on the National Stock Exchange, narrowly surpassing the 16.8% held by foreign portfolio investors (FPIs). This indicates a significant amount of capital flowing into Indian stocks from foreign investors.
2. **Domestic Investment**: Domestic investment in India has been increasing, with private investments accounting for a significant portion of this growth. Private domestic investments depend on various factors such as macroeconomic stability, high household savings, productivity, access to credit, resolution of non-performing assets, and clearing up of balance sheets. This domestic investment trend is a strong indicator of capital flowing into Indian stocks from within the country.
3. **Foreign Direct Investment (FDI)**: FDI is another indicator of capital flow into Indian stocks. India's FDI equity inflows for FY25 surged by 13% to Rs. 4,21,929 crore (US$ 50.01 billion), with significant investments in services and computer software &. This shows a strong influx of capital from foreign direct investments.
4. **Capital Account**: The capital account is a part of the balance of payments (BOP) and reflects the net change in ownership of national assets abroad, less the net change in liabilities of the country to the rest of the world. The capital account is a key indicator of long-term capital flows into and out of Indian stocks.
5. **Bank Credit**: Bank credit is another indicator of capital flow. The increase in bank credit can lead to increased investment in the stock market as investors use loans to invest in stocks. In India, the domestic investment landscape is transforming, with a surge in domestic institutional investments, driven by rising retail investor interest and a maturing retail investment landscape.
These indicators show that there are significant capital flows into Indian stocks, both from domestic and foreign investors.