After hitting a 43-month low in the month of December, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) has surged to Rs 1.75 lakh crore at the end of January. According to Securities and Exchange Board of India (SEBI) data, total value of P-note investments in Indian markets including equity, debt and derivatives, at January-end, has climbed to Rs 1,75,088 crore, from Rs 1,57,306 crore at the end of December.
Of the total, P-note holdings in equities at January-end were at Rs 108,576 crore, while in debts and derivatives were at Rs 10,733 crore and Rs 55,779 crore respectively. The quantum of FPI investments via P-notes increased to 7.1 percent in January, from 6.7 percent in the preceding month. However, in December, investment through P-notes was the lowest since July 2013, when the aggregate value of such investment stood at Rs 148,188 crore. Investment through the route had been declining since September last year when it was at Rs 212,509 crore. It fell to Rs 199,987 crore at October-end and further to Rs 179,648 crore in November.
Markets regulator SEBI had said that steps taken by it on P-notes are 'sufficient enough' to address the concerns of Special Investigation Team (SIT) on black money, but the regulator is open to further suggestions. It had asserted that consistent tightening of norms has made these instruments less attractive. P-notes are typical instruments issued by registered FPIs to overseas investors who wish to participate in Indian markets without registering themselves directly in the country to save time. But they still need to go through a proper due diligence process.