Investments into Indian shares through participatory notes (P-Notes), a preferred route for HNIs and hedge funds from abroad, surged to the highest level in two and a half years at nearly Rs 1.84 lakh crore in October.
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) rose to Rs 1,83,862 crore at the end of October. This was the highest level since May 2011, when the cumulative value of such investments stood at Rs 2,11,199 crore.
At the end of September, foreign investments in Indian market through P-Notes were at Rs 1.71 lakh 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 equity market via P-Notes have been rising in the past few months on the back of continued global liquidity as the US Federal reserve postponed the tapering of its $85 billion monthly bond buying programme to stimulate economic growth. “It can also be attributed to moderation in our current account deficit as well as policy measures taken to attract capital in order to finance the deficit,” an analyst said.