Why Dalal Street jitter on participatory notes?

Participatory notes are not used within the country. They are used outside India for making investments in shares listed in the Indian stock market
Foreign investment in India can broadly be classified into two categories—Foreign direct investment (FDI) and investment made by foreign institutional investors (FIIs). In both of these cases, foreign money enters the Indian markets and fuels growth of economy, industries and capital market.
However, with the number of increasing regulations in India, it is not easy for foreign money to enter the markets.
There are strict guidelines laid down by market regulator SEBI (Securities and Exchange Board of India) for seeking approvals and documentation for FDI. Also, there are several restrictions laid down on the exit of this money.
On the other hand, FII is mainly characterised as portfolio investment i.e. quick money entering the Indian capital market for short-term. Due to its short-term nature, the regulators have laid down fewer guidelines on FII than on FDI. But, the fact remains that foreign money cannot enter Indian markets without regulatory approva

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