The judgment about excess volatility will depend not merely on the quantity of the flow, but, to some extent, on the quality in terms of components of the capital flow.
While the flows on account of equity, foreign direct investment (FDI) into green field issues may be considered to be of a more permanent nature, flows on account of buy-outs through channels that are only technically FDI may not constitute a stable element. Overall, the portfolio investments could be expected to be less stable than FDI.