P-note Investment Continues To Surge For Seventh Month

Investment, Financials

Investment in the Indian capital markets via participatory notes has reached its highest level in six years, totaling Rs 1.33 lakh crore by the end of September. This marks the seventh consecutive monthly increase, driven by strong macroeconomic fundamentals.

According to data from the Securities and Exchange Board of India (SEBI), this is the highest level since July 2017 when investment through participatory notes stood at Rs 1.35 lakh crore. Participatory notes, or p-notes, are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who want to participate in the Indian stock market without direct registration, subject to a due diligence process.

The latest data includes the value of p-note investments in Indian equity, debt and hybrid securities. In comparison to the previous month, p-note investments stood at Rs 1,33,284 crore at the end of September, compared to Rs 1,28,249 crore.

The growth in p-note investments often aligns with the trend in FPI flows. During periods of global environmental risk, investments through this route tend to increase and vice versa. This growth can be attributed to the stable Indian economy amidst an uncertain global macro backdrop, as noted by market analysts.

Out of the total investment of Rs 1.33 lakh crore through participatory notes, Rs 1.22 lakh crore was invested in equities, Rs 10,688 crore in debt and Rs 389 crore in hybrid securities. Additionally, the assets under custody of FPIs grew to Rs 58.45 lakh crore in September, compared to Rs 57.63 lakh crore in the previous month. Notably, FPIs withdrew Rs 14,767 crore from Indian equities in September, while injecting Rs 938 crore into the debt market.

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