P-notes investment drops in September

PTI New Delhi | Updated on October 18, 2020 Published on October 18, 2020

But FPIs positive on domestic market, say experts

Investments through participatory notes (P-notes) in the Indian capital market dropped to ₹69,821 crore at September-end, but experts believe FPIs continue to be confident about the domestic market.

This marks the first decline in investment through the route since March, data available with the Securities and Exchange Board of India (SEBI) showed.

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 — declined to ₹69,821 crore at September-end after hitting a 10-month high of ₹74,027 crore at the end of August. Prior to that, the investment level was at ₹63,228 crore, ₹62,138 crore, ₹60,027 crore and ₹57,100 crore at the end of July, June, May and April, respectively.


The investment level had fallen to an over 15-year-low of ₹48,006 crore at the end of March amid significant volatility in broader markets on concerns over coronavirus-triggered crisis. Of the total ₹69,821 crore invested through the route till September, ₹59,314 crore was invested in equities, ₹10,240 crore in debt and ₹267 crore in hybrid securities.

“While there is a drop in flows in September, but it is still the second best month in this calendar year in terms of inflows. Uncertainty in global market due to second wave of the virus and limited visibility of new stimulus across the world may affect these flows, but at present the confidence continues to be strong,” Harshad Chetanwala of said.

Despite a fall from August numbers, FPI flows through P-note saw continuation of positive momentum in equity and debt instruments in September, Divam Sharma, co-founder of Green Portfolio said.

“Global liquidity and scout for alpha creation opportunities had resulted in such inflows. We believe that with better economic data, and better Q2 numbers from companies in many sectors, the momentum of the flows will continue in the coming quarters,” he added.

The assets under the custody of FPIs increased to ₹33.22 lakh crore at September-end from ₹33.18 lakh crore at August-end.

Meanwhile, FPIs pulled out around ₹1,200 crore from the capital markets last month after pumping in close to Rs 49,900 crore in August.

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Published on October 18, 2020
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