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Investments into India's capital markets through participatory notes (P-Notes) rose to Rs 2.15 lakh crore at the end of May, after hitting a 20-month low in the preceding month.
P-Notes are typically instruments issued by registered foreign portfolio investors to overseas investors who wish to invest in Indian markets without registering themselves directly in India to save on time. But they still need to go through a proper due diligence process.
According to Sebi data, the total value of P-Notes investment in Indian markets -- equity, debt and derivatives -- increased to Rs 2,15,338 crore at the end of May, from Rs 2,12,132 crore in March-end.
The figure in March had touched the lowest level since August 2014 when the cumulative value of such investments stood at Rs 2.11 lakh crore.
The total value of P-Notes investment in Indian markets has fallen since October and the trend continued till February. However, it saw a slight increase in March.
The board of Sebi, in May, tightened norms to check any misuse of controversy-ridden P-Notes by making it mandatory for users of these overseas instruments to follow Indian anti-money laundering law and report any suspicious transactions immediately.
Of the total, P-Note holdings in equities were at Rs 1.32 lakh crore at May-end and the remaining holdings were in debt and derivatives markets.
The quantum of FII investments via P-Notes had dropped to 9.2% in May from 9.3% in the preceding month.
The share of P-Notes has been falling over the years as Sebi tightened disclosure norms and other related regulations. It used to be much higher at 25-40% in 2008 while the reading was as high as 55% at the peak of the stock market bull run in 2007.
In absolute terms, value of P-Notes investment rose to a record Rs 4.5 lakh crore in October 2007, but dropped to Rs 3.22 lakh crore in February 2008 and Rs 60,948 crore in February 2009.
