GDP data serves as a vital macroeconomic indicator influencing fund flow and liquidity in Indian equity markets. India's service sector is the cornerstone of its economy, contributing over 60% to GDP. This includes trade, hotels, transport, communication, finance, real estate, and social services. Despite agriculture employing over 50% of the workforce, it accounts for only 12% of GDP. Manufacturing contributes 15%, while construction adds 8%, and the remaining 5% stems from mining, quarrying, and utilities. This composition highlights a shift towards services, with agriculture still playing a crucial role in employment.

1. Foreign Portfolio Investment (FPI): Positive GDP growth attracts foreign investors seeking robust returns, leading to increased capital inflows. Conversely, disappointing GDP figures can trigger outflows, affecting market liquidity.

2. Domestic Investor Sentiment: Strong GDP growth boosts confidence among domestic retail and institutional investors, encouraging higher participation and inflating liquidity.

3. Sectoral Impact: Growth figures often dictate sectoral preferences, shifting investments toward outperforming industries like IT or manufacturing during economic upswings.

4. Monetary Policy Influence: GDP trends affect RBI’s interest rate policies, further shaping market liquidity by altering borrowing costs and credit availability.

Thus, GDP data acts as a barometer, steering both short-term fund flows and long-term market dynamics.