March 9, 2021

P-note funding rises to over Rs 60,000 crore until Might-end

New Delhi: Investments by participatory notes (P-notes) within the home capital market rose to Rs 60,027 crore until Might-end, making it the second consecutive month-to-month enhance.

P-notes are issued by registered international portfolio buyers (FPIs) to abroad buyers who want to be a part of the Indian inventory market with out registering themselves straight. They, nonetheless, must undergo a due diligence course of.

In response to Sebi knowledge, the worth of P-note investments in Indian markets — fairness, debt, hybrid securities and derivatives — stood at Rs 60,027 crore till Might, whereas the identical was at Rs 57,100 crore on the finish of April.

The funding stage had fallen to an over 15-year-low of Rs 48,006 crore on the finish of March.

The determine at March-end was the bottom stage of funding since October 2004, when the whole worth of P-note investments in Indian markets stood at Rs 44,586 crore.

The decrease determine in March got here amid important volatility in broader markets on issues over coronavirus-triggered recession.

Of the whole Rs 60,027 crore invested by the route until Might, Rs 49,160 crore was invested in equities, Rs 10,106 crore in debt, Rs 159 crore within the derivatives section and Rs 103 crore in hybrid securities.

Fund influx by the route stood at Rs 68,862 crore, Rs 67,281 crore and 64,537 crore on the finish of February 2020, January 2020 and December 2019, respectively. Nevertheless, it was at Rs 69,670 crore at November-end final 12 months.

Arjun Mahajan, head of institutional enterprise, at Reliance Securities stated the P-note is not a most well-liked route for investing in India as Sebi has made registration simpler and likewise fascinating for FPIs. Nevertheless, attributable to sure taxation legal guidelines in India, FPIs nonetheless need to discover this route of investing.

One other side that could be thought-about within the present unsure surroundings is that sure FPI buyers, who do not have an FPI licence, and who might not need to put money into India for long run and simply make investments to both capitalise on straightforward liquidity and likewise engaging valuations (when in comparison with historic peaks), might desire P-note route because it offers them the choice to take a position for nonetheless lengthy they need, make their goal returns and go away, he added.

Earlier in September, Securities and Change Board of India (Sebi) simplified know-your-customer (KYC) necessities and registration course of for FPIs. Moreover, the regulator broad-based the classification of such buyers.

In the meantime, FPIs withdrew a internet sum of Rs 7,355 crore from the capital markets (fairness and debt) in Might. This was a lot decrease than a pull out of Rs 14,858 crore by them within the previous month.