The Nifty index made a smart recovery of 13.65 points to close at 1,187.10, with the NSE recording a turnover of Rs 1,700.79 crore. The turnover on the BSE touched a high of Rs 1,552.01 crore. Confusion reigned on the first day of the current settlement on the BSE over the continuance of the January 15 diktat in the wake of decision to accept demat shares to settle commitments made in the physical segment. Rumours that a part of the anti-dumping package which would benefit the domestic steel and petrochemicals industries is likely to be announced by Tuesday saw the stocks of these two industries move northwards. Tisco touched the upper end of the price band at Rs168.50 before closing at Rs 167.80 on the BSE, up 8 per cent over Friday's close. Although most of the local institutions like UTI and SBI Mutual Fund were reported to have placed huge sell orders in the market, the increasing appetite of new FII entrants for index-based stocks saw supply matching demand. LIC was reported to have bought shares of Asian Hotels and Indian Hotels.

According to market participants, Bajaj Auto, Castrol, Indian Rayon and Infosys Technologies continued to be the star performers on the exchanges. ``The replacement cost analysis highlights the crucial aspect of the way the market has undervalued the Indian Rayon stock,'' said a fund manager at a leading FII brokerage firm. Analysts explain that of the three major divisions of Indian Rayon, the yarn division with its 35 lakh tonne capacity in Karnataka alone is enough to show that the stock is undervalued and needs to be revalued. FII fancy for stocks like ABB, BHEL, HPCL, HLL and Corporation Bank saw these scrips register gains tothe tune of 7-9 per cent on an average. The swadeshi mantra once again affected Bajaj Auto's shares which flared up by Rs 30 to close at Rs 640. The scrip traded in a wider band of Rs 615-650 on the BSE. On the NSE the stock closed at Rs 638.05, registering a neat gain of over 4 per cent.

Rising volumes in ICICI and IDBI along with a sharp rise in the prices of these scrips was attributed to buying by Templeton. According to market sources, United Phosphorus is the next in line to be identified as a takeover target. This also explained the northward movement of the stock at the local bourses. On the BSE the stock closed at the day's highest bid of Rs 137, registering a huge gain of over 10 per cent. The stock was locked at this level on the BSE.

On the NSE about 168 stocks hit the upper end of the price band while on the BSE, about 24 per cent of the index-based stocks attracted circuit filters. Though marketmen said the sentiment was upbeat, the emerging discrepancies in the closing prices of selectpivotals on the BSE and NSE indicated the need for a downward technical correction in the wake of rising carryforward rates.