Investments into Indian shares through participatory notes (P-Notes), a preferred route for HNIs and hedge funds from abroad, hit six-month high of Rs 1.68 lakh crore (about $28 billion) in May.
According to the latest data released by the Securities and Exchange Board of India (SEBI), the total value of P-Note investments in Indian markets (equity, debt and derivatives) rose to 1,68,263 crore at the end of May.
The May figure has reached highest level since November, when the cumulative value of such investments stood at Rs 1.77 lakh crore.
At the end of April, foreign investments into Indian markets through P-Notes stood at Rs 1.57 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), while saving on time and costs associated with direct registrations.
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 government’s policy reform measures and initiatives to address tax-related issues.
Besides, the value of P-Notes issued with derivatives as underlying, was at Rs 1.11 lakh crore at May-end.
The quantum of FIIs investments through P-Notes increased to 11.69 per cent in May from 11.32 per cent in the previous month.
Till a few year-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 disclosure and other regulations for such investments.
The PNs have been accounting for mostly 15-20 per cent of total FII holdings in India since 2009, while it used to be much higher, in the range of 25-40 per cent, in 2008. It was as high as over 50 per cent at the peak of Indian stock market bull run during a few months in 2007.
FIIs, the key drivers of Indian markets, pumped in Rs 22,169 crore (around $4 billion) in the Indian stock market in May after falling to a 16-month low in April.
Additionally, FIIs also infused Rs 5,969 crore ($1.13 billion) in the debt market last month.