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Virendra Verma

Mumbai , June 7

EVERY 10th stock traded on the BSE on Tuesday touched the upper circuit, bulk of the stocks being small-cap shares and from the Z group.

More than 25 per cent of the stocks from the Z group hit the upper circuit.

The Z group comprises stocks of companies that fail to comply with listing rules.

In an upper circuit scenario, there are only buyers and no sellers.

While in the lower circuit, the situation is reverse.

Several brokers and analysts fear this trend and have cautioned investors to avoid buying stocks with weak fundamentals.

Tuesday's statistics on theBSE show that 259 stocks hit the upper circuit out of the 2,574 stocks traded.

Out of this, the maximum number of stocks that hit the upper circuit was from the T group at 85.

This was followed by the B-2 group in which 76 stocks hit the circuit and the Z group with 57 stocks.

Brokers said several stocks going up, especially from the Z group, is very risky for the markets.

"This is not a healthy trend. It shows people are running out of ideas and want to buy whatever comes their way," said Mr Ambarish Baliga, Vice-President, Karvy Stock Broking.

In the past too, there have been instances when large number of stocks have hit the upper circuit; but this is the first time that several stocks from the Z group have hit the upper circuit.

Most of the stocks in this group are penny stocks, which are quoting in single digit and are below their face value.

In this group, most of the companies have weak fundamentals and in many cases the companies are making loss. Many have not been complying with the listing agreement of the BSE.

Violation of the listing agreement includes not filing financial results, shareholding pattern and not redressing shareholders' complaints.

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