Participatory Notes surge to 6-year high at Rs 1.5 lakh crore

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

P-notes, issued by registered foreign portfolio investors (FPIs), allow overseas investors to access the Indian stock market indirectly, without direct registration, albeit after undergoing a due diligence process.

According to recent data from the Securities and Exchange Board of India (SEBI), P-note investments in markets—covering equity, debt, and hybrid securities—stood at Rs 1,49,517 crore by February's close, up from Rs 1,43,011 crore in January.

This surge marks the highest level since June 2017, when P-note investments totaled Rs 1.65 lakh crore.

The growth in P-notes typically mirrors trends in FPI flows, increasing during periods of global risk aversion and decreasing during favourable market conditions.

Market experts attribute February's influx to robust corporate earnings and positive economic growth during the December quarter, with India's GDP expanding by 8.4 per cent, driven by strong performances in the manufacturing, mining, quarrying, and construction sectors.

Of the total investment through P-notes in February, Rs 1.27 lakh crore flowed into equities, Rs 21,303 crore into debt, and Rs 541 crore into hybrid securities.

Additionally, FPI assets under custody surged to Rs 68.55 lakh crore by February-end from Rs 66.96 lakh crore in the previous month.

During February, FPIs injected a net sum of Rs 1,539 crore into Indian equities and Rs 22,419 crore into the debt market.

(with PTI inputs)