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The significance of participatory notes (PNs) by foreign investors, as an instrument for portfolio flows into Indian stock markets has been probed in this paper. India's foreign investor base widening recently seem to be inclined towards hedge funds/unregistered foreign investors who invest primarily via PNs. This gained popularity, especially when it accounted for 50% of all foreign portfolio assets in India. Therefore, the laws relating to PNs have transformed to remain more transparent and an ascending trend in PNs was registered during September to November 2012.

Keywords

FDI, FII, Participatory Notes, SEBI, Securities and Capital Market.
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