India Sensex - Be careful of speculative interest !

It appears that speculation has played a significant role in recent Sensex run-ups. Sharp price rise in some recent high performing stocks have not been backed by adequate delivery based volumes. For example, Reliance Capital, Essar Oil, Reliance Natural Resources Limited and Ispat Industries have attracted lower than average delivery based volumes. Reliance Capital had only 9% delivery based interest on Friday indicating that 91% of the transactions were speculative !

Longer term retail investors need to be wary of such run-ups and be willing to ride out volatility.