Rational market?

Page 26, The Times of India, May 18th 2007 (Friday)
The short snippet in the top left of the page reads : Max India reports a loss of Rs. 3.82 crores.
The middle strip in the page which shows NSE TOP Gainers reads : Max (I) : 257.65 (an intra-day gain of 7.1%)

Further, in the last one week - the price of the share has increased from 204 to 260 rupees per share. Also, some major shareholders have increased their holdings in the company - Medicare and Maxopp Investments. Interestingly, Max India has given an announcement from the Board Meeting that they will not recommend any dividend for the year (obviously, due to the negative profits). The share price rose inspite of no-dividends.

On a business front, Max has primary interests in two fields - Insurance and Medical facilities. While the latter requires heavy capex, the former reaches break-even only in 5-6 years. Also the competition in insurance has been increasing and Max NewYork has to totally rely on agents (ICICI Prudential, SBI Life have a strong bancassurance base aswell). At annual sales of around 170 crs and net profits of 10 crs, the company is too small to vouch an interest in conservative investors like me.

But i'll sure like to know what the fuss is all about - why would people put extensive money on company which has just declared a loss for the quarter. Am I missing something?