P-notes investment climbs to 31-month high of Rs 87,132 cr in Dec

P-notes investment climbs to 31-month high of Rs 87,132 cr in Dec

Investment through participatory notes (P-notes) in the domestic capital market rose to a 31-month high of Rs 87,132 crore at December-end, reflecting the bullish stance of FPIs.

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 Sebi data, the value of P-note investments in Indian markets — equity, debt, and hybrid securities — increased to Rs 87,132 crore till December-end from Rs 83,114 crore at the November-end.

This is the highest level of investment since May 2018, when the fund inflow through this route stood at Rs 93,497 crore.

P-notes investment was Rs 78,686 crore at the end of October 2020, although it had declined to Rs 69,82 crore in September after witnessing growth since March.

Prior to that, the investment level was Rs 74,027 crore in August, Rs 63,228 crore (July), Rs 62,138 crore (June), Rs 60,027 crore (May) and Rs 57,100 crore (April).

The investment level fell to an over 15-year-low of Rs 48,006 crore at the end of March amid significant volatility in broader markets on concerns over the coronavirus-triggered crisis.

Of the total Rs 87,132 crore invested through the route till December, Rs 78,870 crore was invested in equities, Rs 7,562 crore in debt, and Rs 700 crore in hybrid securities.

Divam Sharma, co-founder of Green Portfolio, said that flows into equities in December were higher than in November suggesting continuity of bullish stance from FPI‘s.

The number of FPI registrations has crossed 10,000 this month, which again confirms the bullish stance of foreign capital to chase equity assets in emerging markets, including India, he added.

Recent structural changes and policy announcements under Aatmanirbhar Bharat have further enhanced the investor interest in Indian equities among other emerging market peers, he said.

Besides, the assets under the custody of FPIs have reached Rs 41.82 lakh crore, which is the highest level in history, validating their conviction on Indian markets. This was Rs 38.5 lakh crore at December-end.

Meanwhile, FPIs infused over Rs 71,000 crore in the capital markets across equity, debt, and hybrid instruments last month. This included more than Rs 62,000 crore in equities alone.

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