P-Note investments surge to Rs 1.31 lakh crore in November

NEW DELHI: Investments through participatory notes in the Indian capital markets jumped to Rs 1.31 lakh crore by the end of November, 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 have been increasing continuously since March, following the stable Indian economy against an uncertain global macro 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 Rs 1,31,664 crore at the end of November compared to Rs 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 US 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. Investment through the route rose to a six-year high of Rs 1,33,284 crore at September-end. This was the highest level since July 2017 — when investment through the route stood at Rs 1.35 lakh crore.

In comparison, investment through the route was Rs 1.28 lakh crore in August, Rs 1.23 lakh crore in July, Rs 1.13 lakh crore in June, Rs 1.04 lakh crore at May-end, Rs 95,911 crore at April-end, Rs 88,600 crore at March-end, Rs 88,398 crore at February-end and Rs 91,469 crore at January-end.

Of the total Rs 1.31 lakh crore invested through this route till October, Rs 1.23 lakh crore was invested in equities, Rs 8,207 crore in debt, and Rs 392 crore in hybrid securities.

In addition, the assets under custody of FPIs rose to Rs 60.8 lakh crore by the end of November, up from Rs 56.8 lakh crore in the previous month. Meanwhile, FPIs allocated Rs 9,000 crore to Indian equities last month after dumping equities worth Rs 24,548 crore in October and Rs 14,767 crore in September. Apart from equities, they injected a net investment of Rs 14,860 crore into the debt market last month, marking the highest level in six years.

This surge can be attributed to the drop in US treasury bond yields and the robustness of the domestic market.