P-Notes investments fall to 33-mnth low in November

According to the data available with SEBI, P-Notes investments have fallen to a 33-months low. Investments in domestic capital markets through participatory notes (P-Notes) has plunged to its lowest level in nearly three years to Rs 1.79 lakh crore in November, 2016 against 1.99 lakh crore in October, 2016. Investment was at the lowest level since February 2014.

P-Notes are typical instruments issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to participate in Indian markets without registering themselves directly in the country, with the penultimate goal of saving time.

The SIT on black money last year had suggested that SEBI should further strengthen its norms to keep a tab on beneficial ownership of P-Notes as these were widely used by foreign investors, and could be prone to misuse.

The share of P-Notes has been falling over the years as the market regulator has tightened disclosure norms and other related regulations. It used to be much higher at 25-40 per cent in 2008, while the reading was as high as 55 per cent 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.