Participatory bond investments in Indian capital markets touched Rs 1.5 lakh crore at the end of February, the highest level in almost six years, on the back of mighty performance of the domestic economy.
The latest data includes the value of P-note investments in Indian equity, debt and hybrid securities.
Participation notes (P-notes) are issued by registered foreign portfolio investors (FPIs) to foreign investors who wish to participate in the Indian stock exchange without the need for direct registration. However, they must undergo a due diligence process.
According to the latest data from market regulator Sebi, P bond investment in Indian markets – across equities, debt and hybrid securities – stood at ₹ 1,49,517 crore at the end of February compared to ₹ 1,43,011 crore at the end of January.
The amount has reached the highest level since June 2017, when investments on this route stood at Rs 1.65 lakh crore, according to data from the Securities and Exchange Board of India (SEBI).
The escalate in P bonds broadly follows the trend in FPI flows. When there is a global environmental risk, investment in this way increases and vice versa.
Market experts say that the capital inflow in February can be associated with solid corporate results and positive economic growth trends observed in the December quarter.
India’s economic growth accelerated to 8.4%. in the third quarter of 2023-2024, mainly due to the good performance of the manufacturing, mining and quarrying and construction sectors.
Of the total Rs 1.5 lakh crore invested through this route till February, Rs 1.27 lakh crore was invested in equities, Rs 21,303 crore in debt and ₹ 541 crore in hybrid securities.
Moreover, assets held by FPIs increased to Rs 68.55 lakh crore at the end of February from Rs 66.96 lakh crore in the previous month.
Meanwhile, in February, FPIs invested a net amount of ₹ 1,539 crore in Indian equities and ₹ 22,419 crore in the debt market.
