The Hindu Business Line : Buying interest in small-cap shares baffles brokers

ON a day when most of the stocks indices closed lower, there was active buying in mid-cap and small-cap companies' shares with every 10th stock traded on BSE hitting the upper circuit on Monday.

A stock locked in upper circuit means that there are only buyers for the shares and no sellers and when a stock hits the lower circuit, there are just sellers and no buyers.

On the BSE, there are various percentage levels at which stock are locked in circuit and this levels range between 2 to 20 per cent for different category of stocks. According to BSE statistics for today, 235 companies' shares out of the 2,237 traded on the exchange were locked in upper circuit. That is 10.5 per cent of the companies traded today.

"It is incredible to see 235 stocks hitting the upper circuit when there is not much interest in frontline stocks," said a dealer with a domestic broking firm. He said when shares of the small-cap companies start moving up; it is not a good indicator for the overall market.

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