According to the top market research companies report, the investment through P-notes has declined to Rs 80,092 crore in June-end, which is the lowest level in 20 months. The main reason for this decrease is the aggressive rate hike by the US Federal Reserve. However, experts believe that this investment will be volatile in the near future due to the continued global uncertainty and volatility.
. That said, these investors must go through a due diligence process.
The investment through P-notes has declined to Rs 80,092 crore in June-end, which is the lowest level in 20 months. The main reason for this decrease is the aggressive rate hike by the US Federal Reserve. However, experts believe that this investment will be volatile in the near future due to the continued global uncertainty and volatility.
This was the lowest level since October 2020, when investment through the route was at Rs 78,686 crore. The June figure also marks the second consecutive monthly decline in investment numbers.
According to a portfolio management service provider, the lows of October 2020 in terms of participation in equities are seeing a resurgence, with April 2021’s AUC (assets under custody) reaching similar lows.
This decline is consistent with the expectations and is similar to the slowdown in domestic mutual fund inflows, and FPIs flows as witnessed in the industry. The flight to safety after the US Fed hiked rates is the primary reason for last month’s slowdown, Founder at Wright Research, an investment advisor, said.
“Although we saw market growth this month, July might not be as successful as June. With the continuous global instability and volatility, we anticipate P-Note investments to be just as volatile in the foreseeable future,” she continued.
Foreign portfolio investors (FPIs) should start to invest more money in Indian markets towards the end of this calendar year. This is because valuations are lower than historical averages, and there is a positive outlook for GDP growth. Additionally, the passive money coming into Indian markets should also start to flow in at that time.
Foreign investors pulled out Indian shares worth Rs 50,203 crore in June — the highest net outflow in over two years — amid aggressive rate hike by the US Federal Reserve, elevated inflation and relatively higher valuation of domestic equities. This was also the ninth consecutive month of net withdrawal by FPIs from equities.
