The Stock Exchange of Thailand index yesterday climbed back above the psychological 1,400-point level in the afternoon session before sliding to close the day up by 0.64%, as fund flows are coming back to emerging markets.
Optimism has returned to Asian markets after concerns over the US Federal Reserve's stimulus tapering and a potential US military strike against Syria have eased.
However, analysts warned the sharp gains in the Thai market in the past few days could be only a short-term rebound following a steep sell-off.
They say it is not a sign indicating a reversal of the trend.
The SET index yesterday extended its four-day winning streak, surging to 1,413.98 points at one point, an unseen level since August, before profit-taking in the final 30 minutes erased early strong gains. The main gauge closed the market at 1,393.17 points in heavy trade worth 70.6 billion baht. Foreign investors were net buyers of 3.53 billion baht.
The baht was unchanged from the previous session at 32.16/20 to the US dollar.
"Investors are seeking to invest in high-risk assets again now that concerns have eased," said Apichat Poobunjirdkul, a senior vice-president of Tisco Securities.
Nonetheless, analysts are wary of the speed of the rebound and the increasing risk when the index tests 1,400 points.
"The run-up over the past several days does not confirm the market has entered an upward trend. The index going above 1,500 points, that will confirm the trend," he said.
Kiatkong Decho, a strategist at CIMB Securities (Thailand), echoed Mr Apichat's view, saying the local bourse is not yet on an upward trend.
"The market will really reverse if capital continues flowing into the Thai stock market even after the Fed makes a decision on its stimulus stance," he said.
SET president Charamporn Jotikasthira said the bourse is investigating what caused the irregular trading after 3.30pm yesterday but has not yet found anything unusual.
The SET's probe comes after complaints from investors about the "Gang of 4pm", a group of investors who team up to drive the market sharply up or down late in the session.
Mr Charamporn said the Thai stock market remains attractive, with a price-to-earnings ratio of 11.5 times as of Sept 3.