Investment via P-Notes rises to Rs 2.58 lakh cr in October

Investment through Participatory Notes (P-Notes) into India's capital market grew to over Rs 2.58 lakh crore (about $39 billion) at the end of October.

P-Notes, mostly used by overseas HNIs (High Net Worth Individuals), hedge funds and other foreign institutions, allow such investors to invest in Indian markets through registered foreign institutional investors (FIIs).

This saves time and cost for them, but the flip side is that the route can also be used for round-tripping of black money.

According to Sebi data, total value of P-Notes investment in Indian markets (equity, debt and derivatives) increased to Rs 2,58,287 crore at October-end, from Rs 2,53,875 crore in the previous month.

This was the second successive month when investment through this route increased.

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Fight against black money: Sebi to discuss P-Notes issue

The total outstanding value of P-Notes witnessed a steady rise since January and the momentum continued till March.

However, investments through this route registered a drop in April, but hit a seven-year high in May. The inflows slipped in the subsequent three months (June-August) but marginally rose in September and again grew in October.

As things stand, P-Notes make up around 15-20% of the total FII investment in India since 2009. While it used to be much higher 25-40% in 2008, the reading was as high as over 50% at the peak of stock market bull run in 2007.

The drop in investment via P-Notes during June-August comes amid Supreme Court-appointed Special Investigation Team (SIT) on black money asking Sebi to review its regulations on participatory notes to help identify the end users of these instruments.

However, the government later said it has no intention of banning this financial instrument overnight.

Responding to a query on apprehensions that P-Notes are being misused, Sebi chief UK Sinha had last month said the regulator has all the data about entities who are using this.

The quantum (percentage) of FII investments via P-Notes remain unchanged at 11%.

Till a few years ago, P-Notes used to account for more than 50% of total FII investment, but their share has fallen over the years after Sebi tightened disclosure norms and other related regulations.

In absolute terms, the value of P-Notes investment rose to a record of Rs 4.5 lakh crore in October 2007, but dropped to Rs 3.22 lakh crore in February 2008 and Rs 60,948 crore in February 2009.

Article Source: Business Standard.

Asia shares rise on Wall Street bounce as Fed hikes seen gradual- Business Standard

Asian share markets rose on Thursday as Wall Street bounced on expectations the Federal Reserve would be confident enough of the US economy to raise rates in December but would then proceed with great caution on further tightening.

The prospect of the first US hike in almost a decade kept the dollar strong overall and commodities under severe pressure. Investors also have to steer past a Bank of Japan policy meeting and minutes of the European Central Bank's last meeting.

Japan's Nikkei firmed 1%, brushing aside a disappointing report on exports and imports.

MSCI's broadest index of Asia-Pacific shares market outside Japan added 0.6%. Australia's main index rose 1.1%, aiming for a third straight session of gains.

Sentiment was supported by the Dow which ended Wednesday with a gain of 1.43%, while the S&P 500 added 1.62% and the Nasdaq 1.79%.

Major European stock indexes fell as security issues remained a focus for investors. A suicide bomber blew herself up in a police raid that sources said had foiled a jihadi plan to hit Paris's business district, days after attacks that killed 129 across the French capital.

The French CAC 40 index fell 0.6%.

Minutes of the Fed's last policy meeting showed most members were ready to sanction a lift off in December as long as further moves were then highly dependent on the economy continuing to perform well.

"If - when - they lift rates in December, the Fed will likely be very aggressive in highlighting the idea of a very gradual pace," said Tom Porcelli, chief US economist at RBC Capital Markets.

"We fully expect Yellen to promote this heavily at her press conference."

The bond market seemed to get the message with longer-term debt outperforming and the yield curve flattening noticeably. While two-year yields rose 3 basis points those on 30-year paperactually dipped a basis point.

The premium offered by US two-year debt over its German counterpart also yawned out to 124 basis points, the fattest margin since 2006 and a fillip to the dollar.

The dollar hit a seven-month peak against a currency basket and a 10-month high on the Swiss franc . The euro edged up to $1.0676 , having hit its lowest since August.

The dollar was steady on the yen at 123.51 , after touching a three-month peak of 123.67.

The Bank of Japan holds a policy meeting Thursday and is thought likely to maintain its current pace of asset buying despite the economy slipping back into recession.

Minutes of the European Central Bank's last policy meeting are also due later Thursday and will likely reinforce expectations of further easing in December.

In commodity markets, the high dollar and worries about Chinese demand saw zinc, copper, lead and nickel prices near their lowest in five to seven years.

Oil prices came off three-month lows as short-covering lifted a market initially suppressed by worries about a global supply glut. US crude was up 13 cents to $40.88 a barrel, while Brent stood at $43.14.

Article Source: Business Standard.