Investments via P-notes stand at Rs 97,744 crore till August

Investment in the Indian capital through participatory notes (P-notes) was at Rs 97,744 crore till August-end, and going forward the inflow is expected to remain positive for the rest of the year.

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 Securities and Exchange Board of India (Sebi) data, the value of P-note investments in Indian markets -- equity, debt and hybrid securities -- was at Rs 97,744 crore in August-end compared to Rs 85,799 crore in July-end.

The figure for July has been revised by the regulator from Rs 1,01,798 crore posted earlier.

"One of the FPI had made incorrect/over reporting of values to the tune of Rs 15,999 cr for the month of July 2021 due to which the figures for the month of July 2021 stand revised," as per Sebi website.

Prior to that, the investment level was at Rs 92,261 crore in June-end, Rs 89,743 crore in May-end, Rs 88,447 crore at April-end and Rs 89,100 crore in March-end.

Of the total Rs 97,744 crore invested through the route till August, Rs 89,844 crore was invested in equities, Rs 7,586 crore in debt and Rs 315 crore in hybrid securities.

"The rise in P-notes reinforces the fact that the FPI investment in the Indian markets is increasing on a continuous basis," Deepak Singh, Chief Business Officer at Reliance Securities, said.

He, further, said that India is at the beginning of capex revival phase; corporate earnings recovery looks sustainable and premium valuations might sustain.

"While concerns over global growth due to recent rise in delta variant coronavirus cases in different parts of the world continue to persist, underlying strength of domestic market remains intact," he added.

Divam Sharma, co-founder at Green Portfolio said the equity inflows remained robust in August and September is also looking positive.

According to him, the inflows should remain robust for the rest of the calendar year. However, investors should closely monitor the change in accommodative stance by US Federal Bank as it can dent the FPI inflows going forward.

"We also believe that the monthly FPI inflows to debt securities have bottomed and should henceforth increase in calendar year 2022," he added.

The assets under custody (AUC) of FPI's have almost touched 52 lakh crore in August 2021, which is a record high. It was at Rs 48.36 lakh crore in the preceding month.

Meanwhile, FPIs infused a net sum of Rs 2,083 crore in equities last month and Rs 12,144 crore in the debt market.