With uncertainty over the levy of Minimum Alternate Tax (MAT), investments into Indian markets through participatory notes (P-Notes) have dropped to Rs2.68 lakh crore ($42 billion) at the end of April, after hitting over 7-year high in the preceding month.
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).
Market experts are of view that fears and uncertainty over the levy of Minimum Alternate Tax (MAT) may have a negative impact on investment sentiment in India. In March this year, investment through P-Notes surged to the highest level since February 2008, when the cumulative value of such investments stood at Rs3.23 lakh crore.
As per the data released by Securities and Exchange Board of India (Sebi), total value of P-Notes investment in Indian markets (equity, debt and derivatives) declined to Rs2,68,168 crore at the end of April, from Rs2,72,078 crore at the preceding month-end.
However, the quantum (percentage) of FII investments through P-Notes rose to 11.4 per cent last month from 11.3 per cent in March.