The Indian industry on Tuesday expressed overwhelming concern at the way the stock market had negated all negatives and scaled an all-time high and felt that the Sensex needed a healthy correction.
The Price to Earning ratio in some of the volatile stocks had touched the level of 400, which does not justify their fundamentals, industry felt.
In a snap poll conducted by an Assocham Business Barometer, 80 per cent of the 150 CEOs, who responded to the poll, viewed that the regulators -- Securities and Exchange Board of India and Reserve Bank of India -- had genuine reason to ensure that the present boom in the Sensex was not the result of any 'manipulation or scam' by players in the stock market.
The CEOs serious concern vis-a-vis the movement in the stock prices emanated from the fact that along with the topline and mid-cap shares, scores of unknown penny stocks have resurfaced whose P/E level had reached over 150.
Declaring the result of the snap poll done by ABB, the Chamber's president M K Sanghi said: "Our research shows that the P/E ratios have reached as much as 400 pushing its market capitalisation. Investors need to be careful about these shares and should be cautious."
The respondents to the ABB polls were surprised to the market discounting all negative news like rising oil prices, decline in industrial production in the month of July and behaving positively, which was unlike earlier occasions when such negatives created panic in the market.
However, the CEOs welcomed the foreign institutional investors reposing their confidence in the Indian market and felt that recent rally in the stock market was triggered by the FIIs who poured investments amounting to $8.5 billion till the mid-September, against $8 billion in the whole of last year.
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