Driven by a strong performance of the domestic economy, participatory notes saw investments reach ₹ 1.5 lakh crore at the end of February, the highest level in nearly six years in the Indian capital markets.
The value of P-note investments in Indian debt, equity, and hybrid securities is included in the most recent data.
In order to participate in the Indian stock market without having to register themselves, foreign investors who are registered as foreign portfolio investors (FPIs) issue Participatory notes (P-notes) to foreign investors. But they have to go through a process of due diligence.
According to the latest data from markets regulator Sebi, the value of P-note investments in Indian markets — equity, debt, and hybrid securities — stood at ₹ 1,49,517 crore at the end of February compared to ₹ 1,43,011 crore at the end of January.
The amount has increased to its highest level since June 2017, according to data from the Securities and Exchange Board of India (Sebi), when investment through the route was valued at ₹ 1.65 lakh crore.
P-note growth typically follows the direction of FPI flows. Investment via this channel rises in the event of a global environmental risk, and vice versa.
Experts in the market stated that the strong corporate earnings and encouraging economic growth trends seen in the December quarter are responsible for the February inflow.
In the third quarter of 2023–24, India’s economic growth accelerated to 8.4%, mostly as a result of the manufacturing, mining & quarrying, and construction industries’ strong performance.
Out of the total amount invested through this route up to February, which was 1.5 lakh crore, 1.27 lakh crore went into stocks, 21,303 crore went into debt, and 541,41 lakh crore went into hybrid securities.
Furthermore, the assets held by Foreign Portfolio Investors increased from ₹66.96 lakh crore at the end of January to ₹ 68.55 lakh crore at the end of February.
In February, foreign portfolio investors (FPIs) made net investments of ₹1,539 crore in Indian equities and ₹22,419 crore in the debt market.
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