P-notes investment rises to Rs 68,862 cr till Feb-end

Investments through participatory notes (P-notes) in the domestic capital market rose to Rs 68,862 crore at the end of February, making it the second consecutive monthly increase.

The investment comes at a time when broader market witnessed significant downtrend amid fears of recession due to the coronavirus outbreak.

P-notes are issued by registered foreign portfolio investors (FPIs) 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.

According to the latest data from Sebi, the value of P-note investments in Indian markets -- equity, debt, hybrid securities and derivatives -- stood at Rs 68,862 crore until February, while the same was at Rs 67,281 crore at the end of January.

Of the total Rs 68,862 crore invested through the route, Rs 53,902 crore was invested in equities, Rs 14,739 crore in debt, Rs 144 crore in the derivatives segment and Rs 77 crore in hybrid securities.

Investment in January had increased after hitting a nearly 11-year low at the end of December 2019, when the total value of P-note investments in Indian markets stood at Rs 64,537 crore.

The fund inflow through P-notes in December 2019 was the lowest since February 2009, when the cumulative value of such investments stood at Rs 60,948 crore, according to the data.

This lower quantum of investment through P-notes route could be attributed to liberalised norms for foreign portfolio investors (FPIs) by Sebi, market experts noted.

Earlier in September, the Securities and Exchange Board of India (Sebi) simplified KYC requirements and registration process for FPIs. Besides, the regulator broad-based the classification of such investors.

Meanwhile, FPIs pumped in a net amount of Rs 1,820 crore into equities and Rs 4,734 crore into the debt segment last month as they adopted a cautious stance amid coronavirus scare, subdued economic data and disappointing corporate earnings.