However, in the final countdown the index recorded 49.94 points gain to close at 3,245.88 points. Likewise, the Nifty index also registered a sharp recovery of 19.45 points to close at 944.15 points. According to market players, the extent of FII participation and the figures released by local bourses on advances and declines ratio provide a true barometer of the market sentiments. Interestingly, advances and decline ratio in the case of NSE was pegged at 646:249 while it was 684:371 in the case of BSE. Advances were higher than declines in both the bourses. The FIIs have also reported to have been net buyers on the NSE with their total exposure today at Rs 65.61 crore, while net investmentsat Rs 39.07 crore. On the BSE, FIIs bought stocks worth Rs 5 crore. While local funds have sold to the tune of Rs 39 lakh on the NSE, they were net buyers on the BSE with investments Rs 22 crore.

Sources said that Schrodders and DSP Merrill Lynch were active in terms of placing buy orders at the counters of MTNL, Bajaj Auto and Dr Reddy's Lab. MTNL and Bajaj Auto shot up by 8 per cent respectively to hit the upper end of the price band on the local bourses. FIIs were also reported to have bought huge chunks of infotech stocks and heavyweights like HLL and ITC.

"The market is moving by rotation and there are also quite a few signals indicating the bottoming out process and reversal of the market in the upward direction, " said Ajit Sanghvi of Malini Sanghvi Securities. "Good quarterly results will reinforce the investor's confidence," he explained.

Another prominent feature of the day was the imposition of 5 per cent additional volatility margin (AVM) by the BSE on over 20 stocks. While the NSEimplemented the graded margin system today as the exchange opened for a new trading week, BSE implemented the system since July 6.

Different trading cycles has resulted in major price differentials on both the bourses. On the BSE, stocks like Satyam Computers, Pentafour Software hit the upper ceiling of 20 per cent to attract a AVM of 20 per cent. After Videocon International and BPL, the bulls seem to have turned their attention to Sterlite. On the NSE, Sterlite shot up by 7.84 per cent to close at Rs 184.95 where interestingly 4,48,700 shares were traded; at the circuit price only 100 shares were outstanding.

While Bajaj Auto, Eicher, MTNL and Dr Reddy's shot up in anticipation of the buy-back proposal to be announced shortly, Madras Cement, Mastek and LML registered substantial price appreciation on hopes of good results.

BSE clamps additional volatility argins

BSE has decided to impose additional volatility margin (AVM) of 5 per cent on the following stocks effective July 8: BFL Software,Blue Information Technology, Bombay Oxygen Corporation, Cybertech Systems & Software, Digital Equipment (India), Dr. Reddy's Laboratories, Fujitsu Icim, HCL Infosystems, KLG Systel, Lakshmi Machines Works, MAARS Software International, Mastek, Onward Technology, Orient Information Technology, Pentafour Software & Export, Philips India, PSI Data Systems, Rolta India, Satyam Computer Services, Silverline Industries and Software Solution Integrated. The AVM of 5 per cent will be imposed on the purchase positions including carryforward positions at the end of the day.