P-notes investment continues to soar, climbs to over Rs 63,000 crore till Jul-end

NEW DELHI: Investments through participatory notes (P-notes) in the domestic capital market soared to Rs 63,288 crore till July-end, making it the fourth consecutive monthly rise. 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 Sebi data, the value of P-note investments in Indian markets — equity, debt, hybrid securities and derivatives — stood at Rs 63,288 crore till July-end, while the same was at Rs 62,138 crore at the end of June.

Prior to that, investment level was at Rs 60,027 crore and Rs 57,100 crore at the end of May and April, respectively.

The investment level had fallen to an over 15-year-low of Rs 48,006 crore at the end of March.

The figure at March-end was the lowest level of investment since October 2004, when the total value of P-note investments in the Indian markets stood at Rs 44,586 crore.

The lower figure in March came amid significant volatility in broader markets on concerns over coronavirus-triggered crisis.

Of the total Rs 63,288 crore invested through the route till July, Rs 52,356 crore was invested in equities, Rs 10,429 crore in debt, Rs 250 crore in the hybrid securities and Rs 190 crore in derivatives segment.

Fund inflow through the route stood at Rs 68,862 crore, Rs 67,281 crore and 64,537 crore at the end of February 2020, January 2020 and December 2019, respectively. However, it was at Rs 69,670 crore at November-end last year.

Ashika Wealth Advisors co-founder and CEO Amit Jain said, “We are seeing increasing investment through participatory notes as FPIs are taking fresh long position in selected sectors of Indian economy on hope of early revival.”

Earlier in September 2019, the Securities and Exchange Board of India (Sebi) simplified Know Your Customer (KYC) requirements and registration process for FPIs. Besides, the regulator broad-based the classification of such investors.

Meanwhile, FPIs pumped in a net sum of Rs 3,300 crore in the capital market in July after putting in over Rs 26,000 crore in June. SP HRS