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The Securities and Exchange Board of India (Sebi) in its latest data has showed that Investment in the Indian capital markets through participatory notes slightly dropped to Rs 96,292 crore at the end of December 2022 from the preceding month on higher valuation of domestic markets. Before the decline, the investment through the route had been on an increasing trend since July because of a slump in prices of oil and other commodities and relative outperformance of Indian equity markets.

According to Sebi data, the value of P-note investments in Indian markets -- equity, debt, and hybrid securities -- stood at Rs 96,292 crore at December-end, as compared to Rs 99,315 crore at the end of November. Of the total Rs 96,292 crore invested through this route till December 2022, Rs 86,351 crore was invested in equities, Rs 9,855 crore in debt, and Rs 86 crore in hybrid securities.

The investment level through the route was at Rs 97,784 crore at October-end, Rs 88,813 crore at September-end, Rs 84,810 crore at August-end, Rs 75,725 crore at the end of July. It was at Rs 80,092 crore at the end of June. Investment via P-notes normally moves in line with FPI investment. When there is a global risk to the environment, investment through P-notes increases and vice-versa.

Participatory notes (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.