P-Note investments in Indian stocks hit $27.88 billion in May

Foreign investments in Indian securities through participatory notes (P-Notes) totalled $27.88 billion (Rs1,68,263 crore) in May 2013, according to figures released by the Securities and Exchange Board of India (SEBI).

According to the latest SEBI data, the total value of P-Note investments in Indian markets (equity, debt and derivatives combined) rose to 1,68,263 crore at the end of May, up from Rs1,57,000 crore at the end of April 2013.

P-Note investments in Indian stocks had touched a high of Rs1,77,000 crore - its highest level - in November last year.

For foreign investors, especially high net-worth individuals (HNIs) and hedge funds from abroad, P-Notes are a preferred route investment in India as they allow them to invest in 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 Rs1,11,000 crore as of end-May.

The quantum of FIIs investments through P-Notes increased to 11.69 per cent in May from 11.32 per cent in April.

However, the share of P-Notes as a percentage of FII investments in the country has declined to 15-20 per cent levels against the 50 per cent levels until a few years ago, as SEBI has prescribed tighter disclosure and other regulations for such investments.

FIIs invested Rs22,169 crore (around $4 billion) in the Indian stock market in May after such investments hit a 16-month low in April. FIIs also infused Rs5,969 crore ($1.13 billion) in the debt market last month.