Investments in Indian capital through participatory notes (P notes) stood at 97,751 crore rupees until the end of September, and inflows are expected to remain positive. P-Notes are issued by registered Foreign Portfolio Investors (REITs) to foreign investors who wish to be part of the Indian stock market without registering directly. However, they must go through a due diligence process.
According to data from the Securities and Exchange Board of India, the value of P-note investments in Indian markets – stocks, debt and hybrid securities – was Rs 97,751 crore at the end of September, compared to Rs 97,744 crore at the end of August. The July figure has been revised to Rs 85,799 crore from Rs 1,01798 crore released earlier. Prior to that, the investment level was Rs 92,261 crore at the end of June, Rs 89,743 crore at the end of May, Rs 88,447 crore at the end of April and Rs 89,100 crore at the end of March.
Of the total of Rs 97,751 crore invested until September, Rs 86,624 crore was invested in equities, Rs 10,873 crore in debt, Rs 547 crore in hybrid securities and Rs 68 crore in derivatives.
Sonam Srivastava, founder of Wright Research, Sebi-regustered investment advisor, said the notional value of equity investment has declined over the past three months while the notional value of debt investment by ODIs ( offshore derivative instruments) is increasing. This slight slowdown and shift to debt could be attributed to uncertainty about future stimulus packages and rate cuts which have been a good source of liquidity for equity, she said.
According to her, September has been a good month for P-note flows and portends positive sentiment for Indian markets among foreign investors. The earnings season for India Inc this quarter looks very promising and the good earnings figures should attract more foreign capital to India via the P-notes.
“We are convinced that the dynamics of the Indian markets will last in the long term and we expect that investment via P-notes will be sustained in the future,” she added. In addition, the assets in the custody of REITs also increased to Rs 53.71 lakh crore at the end of September, against Rs 52 lakh crore at the end of August.
REITs infused a net sum of Rs 13,154 crore in stocks and Rs 12,803 crore in the debt market last month.