Sales of shares of an Indian Company to a French resident will be recorded in the balance of payments as a :

Credit item of the capital account

The correct answer is option (4) : Credit item of the capital account

In the balance of payments (BoP), transactions related to the purchase and sale of assets (like shares, bonds, real estate) between residents of different countries are recorded in the capital account. Specifically, the sale of shares to a foreign resident represents an inflow of capital into the country, which is recorded as a credit item in the capital account of the BoP.

Explanation :

1. The sale of shares represents a capital transaction, as it involves a change in ownership of financial assets.

2. In the balance of payments, the capital account records transactions related to financial assets and liabilities between residents and non-residents.

3. When an Indian company sells shares to a foreign resident (in this case, a French  resident), it is a capital inflow for India, and it will be recorded as a credit item in the capital account.