According to market sources, the warehousing activity has been witnessed in stocks like Bata India, Philips, MTNL, Satyam Computers, Zee Telefilms and ITC.

Warehousing of trades, according to guidelines framed by Sebi, is the execution of a firm client order for a large quantity of shares in parts during the same trading cycle or settlement and the issuance of a single contract note at the end of the trading cycle at the weighted average price.

Warehousing activity in Bata India saw the counter flare up by over 10 per cent during the first two weeks of July, moving in a price band of Rs 154 to Rs 185, the intra-week low and high respectively. Steady buying interest in Satyam Computers has seen the company's volumes surge on the bourses with the share price touching an all-time high of Rs 550 on July 16.

According tomarket observers, the general practice among market participants is to warehouse the stocks on behalf of a foreign client who quantifies the threshold limit at a particular counter. Sources said Bata India's shares have been warehoused by domestic brokers and placed later on the books of foreign institutional investors (FIIs) like Jardine Fleming, Morgan Stanley and Schroders at a premium. Sources also added that in many cases the minimum threshold limit specified by FIIs like Templeton and GMO, a US based fund, is 2 lakh shares.

"The executed warehousing transactions are usually parked in a separate client warehousing account till they are contracted out by the member," explained a BSE broker.

"The working of the system is such that the broker is required to issue a confirmation note at the end of each trading day to the institutional client for the partial order executed by him," he added. Alternatively, when the warehoused transactions do not result in the issue of contract notes they are treated astransactions on a member's own account. Market experts however describe the above as an attempt made by the punters first to spread the word that they have been buying for FIIs and later dump the same when most of the operators join the bandwagon for a share in the profits.