According to a Delhi-based broker, "The small market capitalisation stocks are high-risk high-return investments. As prices and volumes are low, volatility is high. Such stocks are also prone to market manipulations and liquidity risk is high if these scrips become dormant."

In fact the present activity in these counters is not based on stronger fundamentals of individual companies but only reflects bullish sentiments for the steel industry, the broker added.

However, investors may use the current uptrend as an exit opportunity and liquidate their long positions.

The current rally in steel industry is due to higher steel prices and sustained interest in old economy counters, not only in India but all over the world.

According to a recent SBI Cap market report, steel prices are falling and not expected to perk up soon, on account of slowdown and increased anti-dumping legislations in US. Monnet Ispat, the OP Jindal group company, has been trading below Rs 10 since 1997, except for a few days in January-February 2000. The stock was quoted at Rs 24.15 as on February 12, after a gap of over five years, gained 89.41 per cent since January 29. Volumes in the stock has also ballooned since the mid of last month.

National Steel Industries, the Indore-based manufacturer of galvanised corrugated sheets, spurted 77 per cent over the last two weeks. Though the stock is trading close to its 52-week high of Rs 5, the price is still low as compared to its all time high of Rs 57 in 1992.

Bhushan Steel, manufacturers of galvanised steel for automobile industry, gained 61.5 per cent since January 29. Last time the stock quoted at this level was in July 1997. The company has big expansion plans to set up a five lakh tonne cold rolled steel plant, at a cost of Rs 750 crore.

Others which gained between 20 to 60 per cent included galvanised corrugated sheet manufacturer Uttam Steel, Lloyds Steel, Ispat Industries, Ensa Steels, Kalyani Steels, Pennar Industries, Tata Sponge Iron and Indian Seamless Steels.