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Investments through participatory notes (P-notes) in the Indian capital market declined to Rs 89,100 crore at March-end, after hitting 33 months high level in the preceding month.

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 and hybrid securities -- fell to Rs 89,100 crore in March-end from Rs 91,658 crore in February-end.

Prior to that, the investment level was at Rs 84,916 crore at January end.

Of the total Rs 89,100 crore invested through the route till March, Rs 81,236 crore was invested in equities, Rs 7,306 crore in debt and Rs 559 crore in hybrid securities.

The month of February 2021 saw the highest level of investment since May 2018, when fund inflow through such route stood at Rs 93,497 crore, and experts said the trend indicated growing confidence of overseas investors into domestic markets.

However, Divam Sharma, co-founder of Green Portfolio, had warned that the second wave of COVID and rise in bond yields in the USA can become a dampener for FPI flows in the near term.

The assets under the custody of FPIs has reached Rs 44.63 lakh crore in March-end from Rs 44.06 lakh crore at the end of February.

Meanwhile, FPIs infused over Rs 17,000 crore in the capital markets last month.

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