After the initial knee-jerk reaction to Pakistan's nuclear tests which saw the Sensex plunge by 158 points during the intra-day session on Friday, bears rushed to cover their positions following renewed buying by institutions, both foreign and domestic. Reflecting the volatility in the market following the dip in the value of the rupee against the dollar and freight rate cuts, the 30-share BSE Sensitive Index moved in the band of 3,589.24 points to 3,747.57 points, the intra-day low and high respectively, before settling at 3,687.80 points, down 35.54 points over the previous close.

Participants said that this was perhaps the first instance in a decade that the market has witnessed volatility ahead of the budget, thanks to the nuclear tests. The trend, otherwise, has been a smooth moveupwards.

The Nifty Index declined by 12.40 points to close at 1,063.15 points, while the Skindia GDR index registered a decline of 0.66 per cent to close at 752.16 points at 12 GMT.

"The railway budget has provided an indication that the fiscal budget is bound to bring in sops for the infrastructure sector," said a fund manager with a leading FII brokerage house, while explaining the reason for the sudden spurt in volumes and prices of steel-sector stocks.

Rumours of a 2 per cent cut in freight rates for the cement and steel sectors saw punters make fresh pre-budget positions at these counters during mid-session.

According to market sources, Morgan Stanley and Jardine Fleming Broking placed renewed buy orders in Tisco which saw the stock hit the upper end of the price band at Rs 150.10 on the BSE, with a phenomenal volume of 52 lakh shares, despite end of account trade on the exchange. The stock recorded a net gain of 9.87 per cent on the NSE to close at Rs 150.80.

Mirroring the move made bytraders, fresh purchases were witnessed in pivotals like ACC and ITC, which went through a roller-coaster ride before ending on a flat note.

ITC fluctuated in the band of Rs 672.10 to Rs 707.25 before closing at Rs 688.10, with 81 lakh shares changing hands on the NSE.

Market sources attributed the selling to Schroders which sold shares of Bhel, MTNL, ITC, Reliance and Bajaj Auto. Sources named Quantum Fund and Capital International among institutional buyers in scrips like HPCL, ITC, Mahindra & Mahindra and Reliance.

On the domestic front, UTI, SBI Mutual Fund, BoI Mutual Fund and Canbank Mutual Fund were reported to have bought shares of NIIT, Wipro, BFL Software, Reliance at Rs 160 levels, Ashok Leyland, Tata Power, HLL and MTNL in small chunks which were distributed among select brokers.

Another counter which recorded a spurt of 8 per cent on account of the confusion over its dividend payout was SAIL. The sharp jump from Rs 11.80 to Rs 12.80 helped the Sensex recover by over 35 points given thefact that SAIL has the highest weightage in the index.

Telecom major VSNL recorded a sharp recovery of 11.63 per cent at the London market to close at $12 during mid-session. On the local bourses, the stock appreciated by 5.88 per cent to close at Rs 900.

Prices up in kerb deals
Operators continued to make fresh enquiries on the kerb ahead of the budget. Interestingly, the excellent performance of L&T added fuel to the pre-budget rally on the kerb.

L&T was quoting at a premium of 7.84 per cent at Rs 273/275 against its official close of Rs 255.70 on the BSE. Tisco shot up by Rs 2.40 to trade at Rs 153.50 against its close of Rs 150.10, while Reliance and SBI continued to attract premiums of Rs 2 each, to be traded at Rs 169.50 and Rs 242, respectively.