Foreign institutional investors in India prefer investing in large firms with less promoter shareholding. Capital flows from foreign investors help bridge the gap between investment needs and domestic savings. These investments impact asset prices, exchange rates, technology adoption, and economic growth. Foreign direct investments are more stable, while portfolio flows enhance stock market liquidity, leading to economic growth. Developing countries have welcomed foreign capital since the 1990s, with capital flows shifting from developed to developing nations post the 1970s oil crisis.