According to the 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 Rs 2,07,639 crore at the end of March from Rs 1,72,738 crore in the preceding month.

This was the highest level since May 2011, when the cumulative value of such investments stood at Rs 2,11,199 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.

According to market analysts, investments in equity market via P-Notes have been rising in the past few months mainly on hopes of a stable government after the ongoing general elections. It can also be attributed to stability in the rupee value against the US dollar.

Besides, the value of P-Notes issued with derivatives as underlying, stood at Rs 1.36 lakh crore as on March 31, 2014. The quantum of FII investments through P-Notes grew to 13 per cent in March from 11.7 per cent in the previous month.

Till a few years ago, P-Notes used to account for more than 50 per cent of the total FII investments, but their share has fallen after SEBI tightened the disclosure norms and other regulations for such investments.

P-Notes have been accounting for mostly 15-20 per cent of the 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 20,077 crore in the Indian stock market.

PTI