Mumbai, Dec 16: For the second day in a row the Sensex recorded gains, driven by short-covering and speculative buying. The 30-share BSE Sensitive Index crossed the psychological barrier of 3,400 points on Tuesday to close at 3,424.87 points, gaining 57.31 points over the previous close. The exchange recorded a turnover of Rs 807.83 crore.

According to brokers, market sentiment improved on rumours that FIIs had entered the market with huge buy orders for select index-based stocks. ``Local institutions like LIC and UTI were reportedly making their presence felt at the stock markets,'' commented a BSE broker.

``However, the index managed to move on a firm note, purely due to lower supplies by the FIIs at higher levels,'' he explained.

According to market sources, Morgan Stanley has started buying stocks of SmithKline Pharma, Reckitt & Colman and Bata in huge chunks, which is said to be a strategy to shore up the net asset values (NAV) of their funds ahead of the year-end.

James Capel was also reported to be taking huge positions at the counters of Reliance, ACC and Telco. MNC stocks flared up on huge purchases by institutional operators. Glaxo recorded a gain of Rs 19.50 to close at Rs 382, Pfizer gained Rs 19.75 to close at Rs 420.25, Knoll Pharma shot up Rs 20 to close at Rs 560, Rhone Poulenc closed higher by Rs 20 at Rs 365, SmithKline Pharma recorded a gain of Rs 25 to close at Rs 505. Pivotals staged a smart recovery on the NSE after the closure of the BSE session.

``Operators wait till the last half an hour to cover up their positions which is the main reason why we see so much of price discrepancy between the two exchanges,'' commented Arun Kejriwal, a senior market analyst.

The Tata Tea counter hogged the limelight with over 1.10 crore shares changing hands on the local bourses. The stock closed at Rs 391.75 on the BSE. The scrip touched a high of Rs 401 on the NSE before closing at Rs 399.75.

Speculators once again tightened their grip on their favourite counters. Reliance moved up to touch a high of Rs 157.50 before closing at Rs 155.75 on the BSE. On the NSE, the share closed at Rs 157.10, over one crore shares changing hands. Similarly, ITC flared up to touch a high of Rs 568.25 on the NSE. FII favourites like Digital Equipment touched a low of Rs 125.25 to register a loss of Rs 9 and Zee Telefilms slumped by Rs 7 to close at Rs 88.65.

Among the index-based stocks, SBI traded on a firm note to close at Rs 220.25 on the BSE and Rs 222.25 on the NSE. Increasing arbitrage opportunities at the MTNL counter saw the stock touch a high of Rs 254 on the NSE before closing at Rs 249.90.

In spite of an upward movement in the index, market analysts seem to be worried about the future course of the rally. ``FIIs have started selling at second-line counters, and the uncertainty over the rupee continues,'' commented a fund manager at an FII brokerage firm. Sources said FIIs were reportedly placing sell orders at the counters of Atlas Copco, Wartsila Diesel, Shriram Honda, Ranbaxy, Wockhardt and Thermax.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.