With the BSE-30 index on upsurge, an indicator of the market mood, Securities and Exchange Board of India has stepped up its surveillance to detect any market misconduct and cautioned small investors to take extra care while trading in less active scrips.
"The regulator is keeping a close watch on the market developments and will take action against any misconduct," a senior Sebi official said in Mumbai on Thursday.
Asked if the market movements were being manipulated, he declined to comment, but said small investors should be careful while making investment in the scrips, which trade less frequently.
"The market regulator has a responsibility to protect the integrity of the market and make investors aware about various kind of risks involved in stock investment," the official added.
A Bombay Stock Exchange spokesperson said Sebi was working in close collaboration with the exchange to monitor market activity and the surveillance mechanism "is in place to detect any misconduct."
Last week, Sebi chairman G N Bajpai, while addressing an investors' awareness programme in Bangalore, had cautioned investors on "shell" companies. "If you feel that a company does not have value in it, refrain from investing your hard earned money," Bajpai had said.
The market has been in an upbeat mode throughout the month and has moved up from 3,792.61 points at close of July 31, to 4,095.39 on August 21.
Market sources said domestic funds and foreign institutional investors have been making heavy purchases on the basis of sound corporate performance.
FIIs have brought in over Rs 10,000 crore (Rs 100 billion) in the Indian markets since the beginning of the year and the market was on a strong footing and unlikely to face any negative reaction till it reached the 4200-mark, analysts said.
Brokers said local mutual funds and operators have been heavy buyers in blue-chip stocks with their focus on PSU and pharma stocks that seem to provide attractive investment opportunity.
Life Insurance Corporation chairman S B Mathur had last week said that the insurance company plans to step up its exposure in equities by over 25 per cent to Rs 6,000 crore (Rs 60 billion) this fiscal, depending on the availability of attractive stocks.