P-Note investments surge to nearly 6-year high, hits Rs 1.5 lakh crore

Investments through participatory notes (P-notes) in the Indian capital markets soared to Rs 1.5 lakh crore by the end of February, marking the highest level in nearly six years, buoyed by the robust performance of the domestic economy.

The latest data encompasses the value of P-note investments in Indian equity, debt, and hybrid securities.

P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors seeking exposure to the Indian stock market without direct registration, subject to a due diligence process.

According to recent data from the Securities and Exchange Board of India (Sebi), the value of P-note investments in Indian markets—equity, debt, and hybrid securities—reached Rs 1,49,517 crore at the end of February, compared to Rs 1,43,011 crore at the end of January.

This amount represents the highest level since June 2017, when investments through this route stood at Rs 1.65 lakh crore.

The surge in P-notes typically correlates with trends in FPI flows, increasing during periods of global risk and decreasing vice versa.

Market experts attribute the February influx to robust corporate earnings and positive economic growth observed during the December quarter.

India's economic growth accelerated to 8.4 per cent in the third quarter of 2023-24, primarily driven by strong performances in the manufacturing, mining, quarrying, and construction sectors.

Of the total Rs 1.5 lakh crore invested through this route until February, Rs 1.27 lakh crore was allocated to equities, Rs 21,303 crore to debt, and Rs 541 crore to hybrid securities.

Additionally, assets under custody of FPIs grew to Rs 68.55 lakh crore at the end of February from Rs 66.96 lakh crore in the preceding month.

Meanwhile, FPIs made a net investment of Rs 1,539 crore in Indian equities and Rs 22,419 crore in the debt market in February.

(With PTI inputs)