With foreign investors raining dollars in Indian market, bulls are on a mad scramble taking the superfast Sensex just 47 points away from the 18,000 level in highly volatile trading on Wednesday. The frenzied buying spree and the intra-day correction sent the fancied Sensex tumbling by almost 600 points to the red at one stage before recovering to end with a gain of 3 per cent, or 518 points to another record high for the tenth straight session, prompting even finance minister P Chidambaram to caution retail investors.

However, the Sensex euphoria was not shared across the broad market spectrum. Hundreds of small and medium companies remained subdued or showed only a marginal rise. The BSE Mid-Cap index, which shows the movement of 274 medium-sized companies, rose just 13.36 points (0.18 per cent). The BSE Small-Cap index, which reflects the movement of 468 companies, declined by 82.21 points or 0.9 per cent.

“I do not think retail investors are entering the market at this level. I would advise them caution,” Chidambaram told reporters in New Delhi. There is apparently a lot of interest from foreign institutional investors, he said, adding, “Why should we not welcome it?” The finance minister also said that in case the Reserve Bank of India (RBI), the country’s central bank, approaches the Government, it would review the ceiling on Market Stabilisation Scheme (MSS) bonds, a mechanism to suck out the liquidity that flows into the market when the RBI intervenes in the forex market. The current MSS bonds’ ceiling is Rs 1,50,000 crore per annum. Out of this, the Government has sucked out liquidity of Rs 1,42,000 crore so far this year.

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