Foreign investments into Indian markets through participatory notes (P-Notes), a preferred route for HNIs and hedge funds, rose moderately to Rs 1.64 lakh crore (over $30 billion) in February.
According to the latest data released by the Securities and Exchange Board of India (SEBI), the cumulative value of P—Note investments in Indian markets (equity, debt and derivatives) was at Rs 1,64,271 crore at the end of February.
In January, P—Note investments in Indian markets was at Rs 1.62 lakh crore.
P—Notes, mostly used by overseas HNIs (High Networth Individuals), hedge funds and other foreign institutions, allow them to invest in Indian markets through registered Foreign Institutional Investors (FIIs).
Notably, investments into Indian shares through P—Notes was at Rs 1.77 lakh crore in November and Rs 1.75 lakh crore in October on policy reform measures taken by the government and its initiatives to address tax—related issues.
Besides, the value of P—Notes issued with derivatives as underlying, was at Rs 1.05 lakh crore at February—end.
The quantum of FIIs investments through P—Notes increased to a six—month hight at 12.33 per cent in February from 11.83 per cent in the previous month. This was the highest figure since August last year, when FIIs investment via P—Notes stood at 12.7 per cent.
Till few years—ago, the P—Notes used to account for more than 50 per cent of total FII investments, but their share has fallen after SEBI tightened its disclosure and other regulations for such investments.
FIIs, the key driver of Indian markets, poured in Rs 24,439 crore ($4.57 billion) into the country’s equities in February. Additionally, FIIs also infused Rs 4,001 crore ($743 million) in debt market during the period under review.