Investments through participatory notes in the Indian capital markets jumped to ₹1.31 lakh crore by November end, bouncing back from a decline in the previous month, owing to the robust performance of the domestic market.
Before registering a decline in October, investments through P-notes had been steadily rising since March, following stable domestic macroeconomic conditions against an uncertain global backdrop.
The latest data includes the value of participatory note investments in Indian equity, debt, and hybrid securities.
Participatory notes (P-notes) are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.
According to the latest data from markets regulator Sebi, the value of P-note investments in Indian markets – equity, debt, and hybrid securities – stood at ₹1,31,664 crore at the end of November compared to ₹1,26,320 crore at the end of October.
The growth in P-notes generally aligns with the trend in FPI flows. When there is a global risk to the environment, investment through this route increases, and vice-versa.
Experts said that the decline in U.S. treasury bond yields could have prompted FPIs to turn their focus back to the Indian market for better returns, besides, listing of IPOs would have also brought foreign investors back.
Investments through the route rose to a six-year high of ₹1,33,284 crore at September-end. This was the highest level since July 2017, when investment through P-notes stood at ₹1.35 lakh crore.