A correction in the carryforward rates, coupled with the liquidation of a chunk of long outstanding positions during the week ended April 30 left enough room for fresh purchases, according to market experts.

Focussed FII buying in heavyweight index stocks like ITC, HLL, ACC and L&T triggered a rally above the crucial barrier of 4,122 points.

"The index move was accentuated by the two pivotals, HLL and ITC, which moved up strongly on the back of focussed FII buying,'' said Maulik Sharedalal of Kaji and Maulik Securities.

According to market sources, rumours of regional parties expressing their views on joining hands with the BJP aided the rally which took off during the initial phase of the trading session.

"We saw a run-upto the budget," said BSE broker Ajit Sanghvi. The finalisation of the date on which the budget will be presented saw the market punters build fresh positions in sugar stocks in anticipation of an industry-friendly budget.

The 7-8 per cent price appreciation in the shares of ITC, HLL and ACC contributed to over 30 per cent of the rise in the market indices. As per BSE's figures, HLL and ITC have a weightage of over 23 per cent in the Sensex. ITC touched a new 52-week high of Rs 813 on the BSE and Rs 809 on the NSE.

MNC and software counters continued to attract institutional and speculative interest. Reflecting the attempts made by punters to make good the losses incurred during the last few sessions, the software stocks hit the upper end of the price bands on the first day of the trading cycle on the BSE.

NIIT was locked at Rs 1,548 on the BSE, with a sell order of 100 shares executed at the day's high. Pentafour Software was locked at the upper end at Rs 894, while Digital Equipment was locked at Rs193.35 and Satyam Computers at Rs 511.10. About 20,000 shares of Cipla changed hands at Rs 670 in the non-pari passu segment of the BSE.

MNC counters like Britannia, Wockhardt, Pfizer and Glaxo continued to hit the upper end of their price bands on the local bourses.

Punters also bought shares of Indo-Gulf Fertilisers in anticipation of impressive results. The stock was locked at Rs 41.75 at the upper end of the price band on the NSE even before the results were announced.

However, the bullish sentiment failed to trickle down to counters like Tata Tea, BPCL, Thermax and Grasim which dipped by over one per cent each on the local bourses.

Rumours of a likely tie-up between the infotech divisions of Tata Infotech and Tata Elxsi saw the latter's stock shoot up by 10 per cent to be locked at Rs 50.20 on the BSE.

Hero Honda, Tata Hydro and Sesa Goa touched their respective 52-week highs at Rs 1,310.50, Rs 105 and Rs 322 on the BSE. Analysts feel that after breaching the 4,126 level the Sensex may faceresistance at the 4,260 level.