Investments into Indian shares through participatory notes (P-Notes), a preferred route for overseas HNIs and hedge funds, surged to the highest level in six years at R2.12 lakh crore (over $35 billion) in May.
According to 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 R2,11,740 crore at the end of May from R1,87,486 crore in the preceding month.
It was the highest since May 2008, when the
cumulative value of such investments stood at R2,34,933 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, investment into the equity market via P-Notes had been rising in the past few months mainly on hopes of a stable, business-friendly government. It shot up in May, after the general election results, primarily on the new government's promise to revive economic growth.
P-Note investments in Indian markets climbed from R1.63 lakh crore in January to R2.12 lakh crore in May.
Besides, the value of P-Notes issued with derivatives as underlying stood at R1.45 lakh crore as on
May 31, 2014.
The quantum of FII investments through P-Notes grew to 12% in May from 11.7% in the previous month.
FIIs pour in R32,000 cr in June
Continuing to bet big on the reforms agenda of the new government, overseas investors have pumped in nearly R32,000 crore in Indian equities and debt this month. Foreign investors have infused R13,764 crore ($2.3 billion) in equities and R18,188 crore ($3.1 billion) in debt markets, taking the total to R31,952 crore ($5.4 billion), show latest market data. Only one trading session is left for this month. According to market experts, the strong inflows by overseas investors have continued mainly on account of various reform measures expected and hopes of a stable economic policy regime.