P-Notes investment rises to $28 bn in Apr

Foreign investments into Indian markets through Participatory Notes (P-Notes), a preferred route for High Networth Individuals and hedge funds, rose to Rs 1.57 lakh crore (about $28 billion) in April.

According to the latest data released by market regulator Sebi, the cumulative value of P-Note investments in Indian markets (equity, debt and derivatives) was at Rs 1,57,578 crore last month.

It was higher than investments of Rs 1.48 lakh crore made in March through this route. However, April's figure was way below Rs 1.64 lakh crore seen in February and Rs 1.62 lakh crore in January.

P-Notes enable overseas HNIs, hedge funds and other foreign institutions to invest in Indian markets through registered Foreign Institutional Investors (FIIs), while saving on time and costs associated with direct registrations.

Notably, investments into Indian shares through P-Notes was at Rs 1.77 lakh crore in November and Rs 1.75 lakh crore in October on government's policy reform measures and initiatives to address tax-related issues.

Besides, the value of P-Notes issued with derivatives as underlying, was at Rs 1.11 lakh crore at April-end.

The quantum of FIIs investments through P-Notes increased to 11.32% in April, from 11.07% in March.

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

The PNs have been accounting for mostly 15-20% of total FII holdings in India since 2009; it used to be much higher, 25-40%, in 2008.

It was as high as over 50% 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 5,414 crore (around $1 billion) in the Indian stock market in April, the lowest in 16-months, amid political and economic worries.

Additionally, FIIs also infused Rs 5,334 crore ($792 million) in the debt market last month.