FP Investment Via P-Notes Rises To 57k Crore Till April

Investments through participatory notes (P-notes) in the domestic capital market increased to Rs 57,100 crore as of April 30 after falling to over 15-year low at the end of the preceding month.

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, hybrid securities and derivatives — stood at Rs 57,100 crore until April, while the same was at Rs 48,006 crore at the end of March.

The figure at March-end was the lowest level of investment since October 2004, when the total value of P-note investments in Indian markets stood at Rs 44,586 crore.

The lower figure in March comes amid significant volatility in broader markets on concerns over coronavirus-triggered recession.

Of the total Rs 57,100 crore invested through the route till April, Rs 46,165 crore was invested in equities, Rs 10,619 crore in debt, Rs 177 crore in the derivatives segment and Rs 139 crore in hybrid securities.

Fund inflow through the route stood at Rs 68,862 crore, Rs 67,281 crore and 64,537 crore at the end of February 2020, January 2020 and December 2019, respectively. However, it was at Rs 69,670 crore at November-end last year.

There was global panic and risk off trade which saw panic selling globally and India was no different. The month of April saw some risk returning and therefore the P-note numbers went back up.

Rs 14,858 crore from the capital markets (equity and debt) in April. This was much lower than over Rs 1.2 lakh crore pulled out by them in the preceding month.