NEW DELHI: Investments into Indian markets through participatory notes (P-Notes) have dropped to 2.68 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).

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

According to 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 2,68,168 crore at the end of April, from 2,72,078 crore at the preceding month-end.

 Market experts are of the view that fear 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 3.23 lakh crore.

 However, the quantum (percentage) of FII investments through P-Notes rose.

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