THE recent rush by foreign institutional investors (FIIs) to pick up low-priced blue-chip shares on the Bombay Stock Exchange (BSE) has hit a legal block. Traders said a limit restricting foreign institutions' holdings to 24 per cent of issued share capital had been reached already in stock of 22 major companies, with another 12 close to the mark, as interest in the low-valued market swelled. 'We estimate that FIIs have made heavy investments in at least another 250 companies over the last 10 days,' stockbroker Parag Parikh said. Foreign institutions revealed recently a plan to lobby the government to raise the 24 per cent ceiling to 40 per cent. While such pivotal stocks as Reliance Industries, Bajaj Auto, ACC, State Bank and Tata group companies have been the targets of foreign institutions, the 24 per cent limit has frustrated efforts to acquire interests in smaller capitalised companies. Vallabh Bhanshali, of merchant bankers Enam Financial Consultants, said huge share capitals of the conglomerates made it unlikely the 24 per cent ceiling would be reached in those cases. 'But if the boom continues at the present speed, FII fund managers may face a problem as to what to do with the funds at their disposal, since they cannot increase their exposure in the desirable companies,' he said. K.N. Vaidyanathan, vice-president of Morgan Stanley Asset Management in India, said: 'The current limits are a positive deterrent to us to bring in sizeable international funds.' Although more than 7,000 stocks are listed on Indian stock exchanges, barely 10 per cent attract foreign portfolio investment. 'The choice is really narrowed down to about 700-800 companies,' Samir Arora, vice-president and chief investment officer of Alliance Capital Asset Management, said. 'And if the market capitalisation in these desirable companies is small, the ceiling is reached very quickly.' Companies in which the FIIs have been held up by the 24 per cent limit include Zee Telefilms, Ganesh Benzoplast, Hindustan Alloys, Flex Industries, Unitech, Punjab Wireless, Majestic Auto, Maral Overseas, ModiLuft Airways and Infosys.