Foreign investments into Indian markets through participatory notes, a preferred route for HNIs and hedge funds, declined to Rs 1.48 lakh crore (about $27 billion) in March.
According to the latest data released by the Securities and Exchange Board of India (Sebi), the cumulative value of P-Note investments in Indian markets (equity, debt and derivatives) was at Rs 1,47,905 crore (Rs 1,479.05 billion) at the end of March, 2013.
The March's figure was lower than the total investments of Rs 1.64 lakh crore (Rs 1.64 trillion) in February and Rs 1.62 lakh crore (Rs 1.62 trillion) in January.
At the end of March 2012, investment by rich overseas entities in the Indian market through P-Notes stood at Rs 1.66 lakh crore (Rs 1.66 trillion).
P-Notes, mostly used by overseas High Networth Individuals, hedge funds and other foreign institutions, allow them to invest in Indian markets through registered foreign institutional investors, while saving on time and costs associated with direct registrations.
Notably, investments into Indian shares through P-Notes was at Rs 1.77 lakh crore (Rs 1.77 trillion) in November and Rs 1.75 lakh crore (Rs 1.75 trillion) in October on government's policy reform measures and initiatives to address tax-related issues.
Besides, the value of P-Notes issued with derivatives as underlying, was at Rs 1.04 lakh crore (Rs 1.04 trillion) at March-end.
The quantum of FIIs investments through P-Notes decreased to 11.07 per cent in March from a six-month high of 12.33 per cent in the previous month.
Till a few year-ago, the P-Notes used to account for more than 50 per cent of total FII investments, but their share has fallen after Sebi tightened disclosure and other regulations for such investments.
The PNs have been accounting for mostly 15-20 per cent of total FII holdings in India since 2009, while it used to be much higher, in the range of 25-40 per cent, in 2008.
It was as high as over 50 per cent at the peak of Indian stock market bull run during a few months in 2007.
FIIs, the key driver of Indian markets, was at a record Rs 1.4 lakh crore ($26 billion) in the Indian stock market in 2012-13, the highest ever since overseas entities started investing in the country.
Additionally, FIIs also infused Rs 28,334 crore (Rs 283.34 billion) in the debt market during the previous fiscal.