That should not, however, blind us to the continuing dearth of good news on the fundamentals of the economy. Recent news reports have cast doubts on this year's agricultural prospects, while the IMF's report has been sceptical on the ability of the government to meet its fiscal targets and has called for tight money. These do not augur well for the recent rally in the stock markets.

Since there is little hope of rationalising the upward movement in the market on domestic grounds, analysts are searching for reasons in overseas markets. Expectations of a rate cut by the US Federal Reserve, it is being argued, will lead to money flowing out of bonds in the US to the American stock market and to emerging markets.

The US market has already reacted positively to that expectation, but the logic seems decidedlyover-optimistic as far as flows to the submerging markets are concerned. Which investor in his right mind would risk investing afresh in Brazil when outflows are a billion dollars a day?

There is no doubt FIIs have of late exhibited a more favourable opinion of Indian markets. This could be owing to the higher weightage in the MSCI index. But it is another thing to hope that that will form a basis for a sustainable rally. One ominous indicator is the high badla rate, which ensures that leveraged operators will sell soon.

The most plausible explanation for the sudden IMF interest is the technical "buy" signal in the charts around the Sensex's 3000 mark. Time and again, momentum for a breakout has been built up for one reason or another, but the absence of good fundamentals has put paid to the rally.