Investments through participatory notes in the Indian capital markets reached Rs 1.5 lakh crore at the end of February, making it the highest-level in nearly six years, driven by a strong performance of the domestic economy.

The latest data includes the value of P-note investments in Indian equity, debt, and hybrid securities.

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.

According to the latest data from markets regulator Sebi, the value of P-note investments in Indian markets — equity, debt, and hybrid securities — stood at Rs 1,49,517 crore at the end of February compared to Rs 1,43,011 crore at the end of January.

The amount has reached the highest-level since June 2017, when investment through the route stood at Rs 1.65 lakh crore, data with the Securities and Exchange Board of India (Sebi) showed.

The growth in P-notes generally aligns with the trend in FPI flows. When there is a global risk to the environment, investment through this route increases, and vice-versa.

Market experts said that influx in February can be attributed to robust corporate earnings and positive economic growth trends observed during the December quarter.

India’s economic growth accelerated to 8.4 per cent in the third quarter of 2023-24, mainly due to good performance by the manufacturing, mining & 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 Rs 541 crore in hybrid securities.

In addition, assets under custody of the FPIs grew to Rs 68.55 lakh crore in February-end from Rs 66.96 lakh crore in the preceding month.

Meanwhile, FPIs invested a net sum of Rs 1,539 crore in the Indian equities and Rs 22,419 crore in the debt market in February.