Investment in P-notes rises to Rs 81,220 cr till April end

Out of the total investments made till April-end, Rs 58,820 crore was invested in the equities segment, Rs 21,542 crore in debt and Rs 123 crore in derivatives market.

Investments in the domestic capital market through participatory notes, led by equity allocation, rose to Rs 81,220 crore at the end of April on hopes of favourable market conditions.

Participatory notes (P-notes) are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly after going through a due diligence process.

The total value of P-note investment in domestic capital markets -- equity, debt and derivatives -- stood at Rs 81,220 crore till April-end, latest Sebi data showed.

Out of the total investments made till April-end, Rs 58,820 crore was invested in the equities segment, Rs 21,542 crore in debt and Rs 123 crore in derivatives market.

There is a rise of 3.98 per cent in the total value of P-notes investment from the previous month when the total investment stood at Rs 78,110 crore.

"Sudden jump in P-Note assets in April 2019 is much steeper than overall FPI assets.

“This surge in P-notes assets is led by equity allocation with hopes of return of ruling party with majority and continuity in policy and reforms," said Rajesh Cheruvu, chief investment officer, WGC Wealth.

Last week, the Bharatiya Janata Party (BJP) won over 300 seats on its own out of 542 seats in the Lok Sabha elections -- the first back-to-back majority for a single party since 1984.

Analysts believe the emphatic victory for the Modi-led coalition will ensure continuation in reform measures initiated during the NDA's first term.

According to Cheruvu, investments through P-notes have been declining since April 2017 due to a series of Sebi circulars and clarifications on usage of P-notes by non-resident Indians.

"At the same time, a healthy growth has been witnessed in (FPI) registrations due to ease in registration process thereby helping P-notes investors to shift their investments to FPIs," he added.

Photograph: Reuters