Foreign investors reaping quick profits have triggered a major decline in Russian share prices, with selected oil and gas stocks suffering the most severe losses, dealers and analysts said Monday.


While the ruble-based Moscow Times Index edged upward 0.21 points to 133.99 on Monday, the dollar capitalization of stocks in the index, which is dominated by oil and gas shares, fell nearly 7 percent due to the ruble's sharp devaluation against the dollar. Since Sept. 27, the index has plunged more than 20 percent when expressed in dollar terms.


But brokers downplayed the effect of the falling Russian currency on the market, saying that profit-taking and restructuring of portfolios in anticipation of new share issues were more significant than the value of the currency, which has fallen 40 percent decline since Sept. 1.


"There is certainly some connection, and the sinking currency is bound to scare some smaller investors," one Russian broker said. "But a much more important factor is that most Western money managers are taking year-end profits."


In the fledgling Russian stock market, investors have fewer indicators to prove profits -- such as price-to-earnings ratios and dividends -- than they have in more established markets. To show investors that their money is well-spent, short-term players such as hedge funds cash in stock.


Other investors are selling off stocks that have already seen big gains, using the profits to pick new stocks that show potential.


"A lot of investors have already made five times their initial investment," said Konstantin Melnikov, head of foreign relations at Rinaco-Plus. "They want to bring in fresh money, get positions in fresh stocks."


These sell-offs have created a situation where sellers are severely outnumbering buyers. Locally, there has been about a 30 percent drop in the volume of trades, one broker said.


Facing the difficulty of selling stocks on the illiquid Russian market, many foreign funds are trading shares outside the country, calling their Russian brokers only to record the trades, brokers say.


As foreigners sell, oil and gas stocks such as Komineft and LUKoil divisions Kogalymneftegaz and Urayneftegas have been among the big losers, with prices dropping to their lowest levels this fall, according to the Skate-Press Consulting Agency. Urayneftegas forfeited nearly 50 percent of its share value last week alone.


The slack is likely to be taken up by infrastructure stocks that are just coming to market, such as telecommunications, cement and utilities, said Sergei Skatershchikov, senior partner at Skate Press.


"Traditional emerging market stocks are becoming popular," he said. "Investors are shifting to more understandable businesses."


Market observers were not sure when the decline would end. Several brokers said the Russian market's roller-coaster ride probably will not stop until large institutional investors enter the market, offsetting the short-term players. Institutional investors are usually large organizations, such as pension funds, colleges or mutual funds, that trade large volumes of stock. Short-term investors, such as hedge funds, tend to look for quick gains by getting in and out of markets.


While the market has been volatile, most observers said they were not worried. "The real worry is when the political situation gets bumpy," said one Western investor. "And when they start killing brokers."