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Securities and Exchange Board of India (SEBI) in its latest data has showed that investment in the Indian capital markets through Participatory notes (P-notes) dropped to Rs 88,398 crore month-on-month in February 2023 amid higher valuation of domestic markets. This was the third consecutive monthly decline in the investment level. Before this, investment through the route had been on an increasing trend since July 2022 because of a slump in the oil and other commodities prices and the relative outperformance of Indian equity markets.

According to data, the value of P-note investments in Indian markets -- equity, debt, and hybrid securities -- stood at Rs 88,398 crore at the end of February 2023 compared to Rs 91,469 crore in January-end. Prior to that, the investment level through the route was Rs 96,292 crore at the end of December 2022 and Rs 99,335 crore at the end of November 2022. It was Rs 97,784 crore at October-end last year. Investment via P-notes normally moves in line with FPI investment. When there is a global risk to the environment, investment through this route increases and vice-versa.

P-notes are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.