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Foreign investments in Indian markets through Participatory Notes peaked to a seven month high of Rs 1,46,600 crore in September, buoyed by expectations of fresh initiatives by the Government on policy reforms as well as the QE3 in the US boosting investor sentiment, according to market watchers.
PNs are contracts issued by FIIs and sub-accounts registered with the SEBI to investors in other countries.
According to the SEBI Web site, the total value of P-Note investments in Indian markets (equity, debt and derivatives) at September end is the highest since February, when cumulative value of such investments stood at Rs 1,83,151 crore. However, in percentage terms with respect to total assets under custody, FIIs investments through these instruments declined to 12 per cent against 16.4 per cent in February.
The present peak notwithstanding, the sustainability of the high flows is still a question mark, according to market experts.
Strategist & Head of Research, SMC Global Securities Ltd, Jagannadham Thunuguntla said: “The sustainability of this peak would depend on the US election results and implementation of local reforms.”
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