On the other hand, the Kuala Lumpur stock exchange composite index appreciated by 10 per cent from 675 to 743 points and was the only other market in the region to provide positive returns during the month. The Bangkok SET index dropped marginally from 459 points to 453 points during the month, while the Manila composite index dropped by 0.57 per cent to 2420 points from 2434.

"The gain by Indian markets was primarily due to the re-rating of cyclical stocks by foreign insitutional investors (FIIs) on an anticipated revival of the economy," Ashu Dutt, chief executive Dutt Stock Broking said. The rally in the domestic stock markets was mainly onaccount of FIIs doubling their investment in the country to Rs 1,750 crore from Rs 965 crore in April.

Subrata Ray of the DBS Securities felt the rise in share prices was due to the undervaluation of the Indian stocks compared with other emerging markets in Asia, which had gained phenominally in April. In April, Thailand markets were up 29 per cent, the Phillipines 20 per cent, Malaysia 34 per cent, while India was the only market which gave negative returns. In April, the Sensex dropped by 11 per cent and NSE Nifty by 9 per cent due to the political turmoil.

In May, the Hang Seng index was down by 9 per cent from 13,333 to 12,147 and Nikkei dropped by 3.5 per cent to 16,111 from 16,702 points at the beginning of the month. "The rally in May was due to the uptrend in commodities stocks in India due to international prices of major commodities rising," Dutt said, adding that in south-east Asia there were very few commodity stocks.

"In this region there are large number of banking and finance companystocks but very few commodity stocks," he said. Ray said rise in the Indian markets was also due to a technical correction in other Asian markets and the additional money which was allocated to this region. A large portion of this allocation came to India specially from hedge funds, he said.

Among the commodity stocks which were up im May included Reliance Industries up from Rs 129 to Rs 167, Grasim from Rs 113 to Rs 172, Larsen & Toubro from Rs 187 to Rs 244. Other stocks in the limelight included HPCL which rose from Rs 187 to Rs 244, Tisco from Rs 80 to Rs 109 and Tata Chemical from Rs 55 to Rs 65 during the month.