Confined market rally

An internal study by the finance ministry has found that there were no surveillance or regulatory problems when the Bombay Stock Exchange (BSE) benchmark index touched new highs recently.

The rally was confined to select scrips and there was no real overall spurt in stock prices. Mid-caps and small-caps continued to remain laggards. These are some of the findings of a study undertaken by the North Block on the Sensex’s journey from 12,000 to 18,000.

The Sensex crossed the 12,000-mark for the first time on April 20, 2006. It crossed the 18,000, mark on October 09, 2007.
However, Sebi proposals to restrict investments through participatory notes triggered a more than 1,700- point crash in the market on Wednesday, prompting suspension of trade for an hour.

While the market recovered after statements by finance minister P Chidambaram and Sebi chief M Damodaran, the volatility continued on Thursday. The Sensex closed with a loss of over 700 points.

Interestingly, more than a quarter, or 25%, of the listed stocks declined during this period, with the rally remaining confined to the top 30 scrips. In fact, the BSE-30 stocks were far ahead of the NSE-50 in terms of the quantum of increase, an official said.

The rise in mid and small-cap stocks was around 5% of the overall movement. The study, which analysed the movement of the index and the investment pattern, as it crossed each 1,000-point milestone, has revealed that the investment pattern remained the same during the rise. But, many promoters were found to be partly selling their stakes, taking advantage of the bull run.