P-Notes investment rises to Rs 1.48 lakh cr in July

New Delhi: Investments into Indian shares through participatory notes (P-Notes), a preferred route for High Networth Investors and hedge funds from abroad, rose to Rs 1.48 lakh crore (about USD 24 billion) in July.

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) increased to Rs 1,48,118 crore at the end of July after hitting a 11-month low of Rs 1.47 lakh crore in June.

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.

Besides, the value of P-Notes issued with derivatives as underlying, stood at Rs 94,814 crore at July-end.

However, the quantum of FIIs investments through P-Notes increased to 11.45 percent in July from 10.93 percent in the preceding month.

Till a few years ago, P-Notes used to account for more than 50 percent 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 percent of total FII holdings in India since 2009, while it used to be much higher, in the range of 25-40 percent, in 2008.

It was as high as over 50 percent at the peak of Indian stock market bull run during a few months in 2007.

FIIs, the key drivers of Indian markets, pulled out Rs 6,086 crore (around USD 1 billion) from the Indian stock market in July.

Additionally, FIIs withdrew Rs 12,037 crore (USD 2 billion) from the debt market last month.

PTI