The Nifty Index also recovered by 24.75 points to close at 949.20 points.Frenzied purchases by domestic institutions in heavyweight index stocks coupled with concentrated buying in infotech scrips helped share prices rally on both the NSE and BSE.

Market participants attributed the sudden spurt in share prices to fresh buying by FIIs, stability on the rupee front, hopes of the differences between political parties being ironed out and the effect of sanctions waning.

However, most investors maintained a cautious approach with dealers preferring to adopt a wait-and-watch attitude till the Sebi committee decides on the margins for regulating the activities of both the bulls and bears.

According to NSE member Nipun Mehta, "Sentiments were certainly upbeat today but the question is thesustainability of this bullish rally. The political instability is a major hurdle still to be crossed." A similar view was shared by another NSE broker who strongly feels that the market has not bottomed out as yet. Today's buoyant reaction, he said, is mainly due to a slowdown in the sales pressed by FIIs, which market participants feel is a positive sign.

According to sources, FIIs like Morgan Stanley and Government of Singapore were reported to have placed buy bids at index counters like ITC, Castrol, BHEL, MTNL and software stocks like Infosys and NIIT.

Sources also said there were rumours that special permission had been granted to select FIIs to increase their stake in Satyam Computer, Zee Telefilms, NIIT and Infosys which saw these stocks appreciate by 10 per cent each on an average.

The Unit Trust of India was rumoured to have been active in the market today, given the fact that June 30 is the last day to decide on the NAVs. UTI was buying in counters like Telco, Tisco and SBI.

Reflecting theupbeat mood of the market, as many as 70 counters attracted circuit breakers on the higher side and many of the counters were up by around 5 per cent.

The spurt in the share prices of MTNL, Raymond and Voltas, which hit the upper end of the price band on Monday after witnessing a price erosion of almost 50 per cent in the post budget phase was attributed to FIIs.

"The recent decline in counters like BHEL and MTNL was not commensurate with the their fundamentals, so they attracted some unusual buying interest at such low levels," said Rajesh Jain, executive director, Pranav Securities.

Voltas saw some activity mainly on the news of it selling its refrigerator unit to Electrolux. HLL witnessed some selling pressure and market men attribute this mainly to liquidation by FIIs. However, the scrip closed marginally higher at Rs 1,503.50 as against Friday's close of Rs 1,459. A major downfall in the scrip was arrested by UTI. BPL and Videocon International continued to be hammered down on the localbourses.

Infosys surges on hopes of higher FII limit

FIIs are reported to have sought a fresh approval from the RBI to purchase fresh shares in Satyam Computer, NIIT, Infosys and Zee Telefilms. The information, however, could not be confirmed, but the stocks shot up on expectations of fresh buying in these counters by FIIs.

According to market sources, FIIs have sought RBI's approval to purchase an additional 3.25 lakh shares of Satyam Computers, 33 lakh shares of Zee Telefilms, 1.6 lakh shares of NIIT and 1.27 lakh shares of Infosys. These stocks have zoomed over the last four trading sessions, recording gains in the range of 15 per cent to 46 per cent.