Sensex doubled. So did 'hot money'

It is not unnatural for investors to be ecstatic when they see their stocks doubling within a period of six months. Particularly, if this happens across a range of not only midcap and smallcap but also large bluechip stocks. The BSE Sensex had a dream run in the past six months when it doubled from near 8,000 levels in March 2009 to 16,000 levels in September 2009. And investors had enough reasons to smile. While the super-attractive valuations definitely attracted hoards of retail and long term investors, there was also another class of investors that is notorious for having caused havoc in the Indian stock markets. These are the unregistered FIIs who invest via Participatory Notes (P-Notes) only to artificially influence the stock prices in the short term.