Foreign funds have bought $957 million of local equities yesterday alone, taking the total inflow so far this month to $4.6 billion.

"Inflows are high as foreign institutional investors find Indian shares attractive," a finance ministry official, who declined to be named, said. "It is also because of the interest rate differentials," he added.

Last week, finance minister P Chidambaram said capital inflows have been much more than anticipated.

Domestic mutual funds have also been aggressively buying shares.

The BSE Sensex rose to a record high for the 18th time in 19 sessions on Tuesday, but gave up the day''s gains as investors were concerned about expensive valuations.

"The rise in the Sensex is not a concern," the finance ministry official said.

Thanks to a smart rally staged by a few blue chip stocks, the Sensex, which had crashed to 18,777.75, losing nearly 400 points from a new high of 19,174.45 it had touched earlier in the day, bounced back in late afternoon trade.

The Sensex is down by just around 22.89 points or 0.12 per cent at 19,035.78 now. The Nifty, which tumbled to a low of 5578.45, has recovered smartly to 5660.70, cutting down its loss to 0.17% or 9.70 points.