P-Notes investment declines to Rs 1.83 lakh crore in November

New Delhi: Investments into Indian shares through participatory notes (P-Notes), a preferred route for HNIs and hedge funds from abroad, slipped to Rs 1.83 lakh crore (about USD 29 billion) in November.

According to the latest data released by market regulator Sebi, the total value of P-Notes investment in Indian markets (equity, debt and derivatives) declined to Rs 1,83,237 croreat the end of November after hitting two-and-a-half years high of Rs 1,83,862 crore in the preceding month.

[caption id=“attachment_1169201” align=“alignleft” width=“380”]  Representational image: AFP[/caption]

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.

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Besides, the value of P-Notes issued with derivatives as underlying, stood at Rs 1.11 lakh crore at the end of November 30, 2013.

The quantum of FII investments through P-Notes was at 13 percent.

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

P-Notes have been accounting for mostly 15-20 percent of the total FII holdings in India since 2009, while it used to be much higher, in the range of 25-40 percent, in 2008. It was as high as over 50 percent at the peak of Indian stock market bull run for a few months in 2007.

FIIs, the key drivers of Indian markets, pumped in more than Rs 8,000 crore (USD 1.3 billion) in the Indian equity market last month. However, they withdrew over Rs 5,900 crore (USD 957 million) from the debt market in November.

PTI