Investments in the Indian markets through participatory notes (P-Notes), a preferred route for high networth individuals (HNIs) and hedge funds from abroad, hit an 11-month low of Rs 1.47 lakh crore (about $25 billion) in June.

According to the latest data released by the Securities and Exchange Board of India (SEBI), the total value of P-Note investments in the Indian markets (equity, debt and derivatives) declined to Rs 1,47,498 crore at the end of June after hitting a six-month high of Rs 1.68 lakh crore in May.

This is the lowest level since July 2012, when the cumulative value of such investments stood at Rs 1.29 lakh crore.

P-Notes, mostly used by overseas HNIs, hedge funds and other foreign institutions, allow them to invest in the Indian markets through registered Foreign Institutional Investors (FIIs), while saving on time and costs associated with direct registrations.

Besides, the value of P-Notes issued with derivatives as underlying, stood at Rs 99,763 crore during June-end.

Till a few years ago, P-Notes used to account for more than 50 per cent of total FII investments, but their share has fallen after SEBI tightened the disclosure and other regulations for such investments.

P-Notes have been accounting for mostly 15-20 per cent of the total FII holdings in India since 2009, while it used to be much higher, in the range of 25-40 per cent, in 2008. It was as high as over 50 per cent at the peak of Indian stock market bull run during a few months in 2007.

FIIs, the key drivers of Indian markets, pulled out Rs 11,027 crore (around $1.85 billion) from the Indian stock market in June. Additionally, FIIs withdrew Rs 33,135 crore ($5.7 billion) from the debt market last month.

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