Investment via P-notes rises to Rs 82,619 crore till May

Investments in the Indian capital market through participatory notes increased by nearly Rs 1,400 crore to Rs 82,619 crore till May-end, a gain of 1.72 per cent over the previous month.

P-notes are issued by registered foreign portfolio investors to overseas investors who wish to be part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.

As per latest data by the Securities and Exchange Board of India (Sebi), the total value of P-note investments in the Indian markets -- equity, debt, and derivatives -- rose to Rs 82,619 crore till May-end, from Rs 81,220 crore at April-end.

Of the total investments, P-note holdings in equities stood at Rs 61,574 crore, followed by debt (Rs 19,681 crore) and derivatives (Rs 193 crore).

Investment through P-notes has been on the rise for the previous three months.

A cumulative investment of Rs 73,428 crore was made till the end of February, Rs 78,110 crore till March and Rs 81,220 crore till April end.

P-note investments were on a decline since June 2017 due to several measures taken by the market watchdog to stop the misuse of the controversy-ridden instrument.

In July 2017, Sebi had notified stricter norms stipulating a fee of USD 1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes.