What they are buying, as a matter of fact, are Bank of Madura shares. From a sleepy 1,000 to 2,000 shares per day on the National Stock Exchange (NSE), the scrip's volumes had jumped to 130,000 shares on Monday, when it hit the NSE's circuit-breaker at Rs 143.50.

When trading opened on Tuesday after the freeze, the scrip once again hit the circuit-breaker at Rs 157.80, while 96,000 shares traded hands. This, despite the aftershock of the nuclear test explosions that sent shares into a tailspin. In a mere 21 trading sessions, the Bank of Madura scrip gained more than a staggering 107 per cent in value.

That this is not part of the market's mere expression of support for bank scrips in general is evident by the performance of other bank scrips. In the same period, State Bankof India lost 11 per cent, Bank of Baroda lost 6 per cent, Dena Bank gained less than 1 per cent, Bank of India lost 12 per cent while the highest gain - 16 per cent - was recorded by Karur Vysya Bank, fuelled by rumours of an imminent bonus.

Coincidentally, BoM general manager S Kathiresan also blamed "rumours" floated by "interested parties" for the spurt. Marketmen confirm that concerted efforts are on by certain parties to mop up BoM shares. They also do not rule out frontrunning by a few brokers.

The Spic group, according to sources, is sending feelers to certain top shareholders to buy the latters' holdings in the bank at a steep premium to the market price. Spic vice-chairman AC Muthiah's interest in the bank is not new. A couple of years ago, he indirectly acquired about 4 per cent of the bank's equity. The BoM management then declined to effect the transfer on the grounds that it was a hostile move.

Belonging to the Chettiar community would be an added advantage for Muthiah as BoM, which wasset up essentially as a community bank, would stay within the community so to speak - thereby avoiding a replay of the Tamil Nadu Mercantile Bank fiasco.

There is a possibility that other suitors may be in the fray as well. The stockbroking arm of ING Barings, according to market circles, is reportedly active in the market, picking up Bank of Madura shares on behalf of an undisclosed client. Another foreign broking firm has also shown interest in the bank and is said to have approached the promoters more than once with an offer. Thiagarajan, however, denied this.

The market grapevine is that Thiagarajan is not averse to selling out "if the price is right". This, of course, was also denied by him. But several merchant bankers confirmed that news of such a move was not only in the air but that any person with a "good proposal" could approach the bank.

It could simply be that Bank of Madura may have grown to a level where Thiagarajan may find it difficult to fund any further expansion. Thiagarajan alsoowns Thamarai Mills, which is sick and under pressure from institutions to pay up dues.

Moreover, analysts add that this is the best time for him to sell his stake. The bank has been performing well and his thrust on automation is paying dividends, but he will be forced to improve capitalisation as the bank grows. That would call for promoters bringing in funds.

Thiagarajan holds about 32 per cent stake, while Kotak Mahindra has 8 per cent. Other top shareholders are P Orr & Sons group and the Spic group.

The bank has been performing well. With 280 branches, 120 of them fully automated, representing 85 per cent of the business, its strength has been high-speed transfer of funds. Its NPA (1996-97) was 5.2 per cent and capital adequacy 10.93 per cent. It has invested Rs 50 crore on automation, while another Rs 50 crore is to be deployed over the next few years. As a result of computerisation, the business per employee has jumped from Rs 27 lakh three years ago to Rs 1.23 crore in 1996-97.