The S&P CNX index also registered a gain of 1 per cent or 8.25 points to close at 829.15 points on the first day of its trading cycle.

According to market sources, FIIs were rumoured to have placed buy orders at the counters of Telco, Bajaj Auto, ITC, Zee Telefilms, Glaxo and ICICI.

Market rumours related to a further easing of the norms related to depreciation accounting principles especially in the case of LCVs led to a fresh spree of buying interest at the Telco counter.

Amidst phenomenal rise in volumes, the Telco stock jumped by over 8 per cent to be locked at the upper band of the price band at Rs 121.70 on the BSE. About 90 lakh shares exchanged hands on the local bourses. On the BSE, the stock was the fifth largesttraded stock with a phenomenal turnover of Rs 57.74 crore.

Market was agog with rumours that Morgan Stanley and CSFB bought huge chunks of Telco during the initial phase of the session. "The positive news has made the investors call for a bottom at the counter," explained a BSE broker in the light of the technical positions at this counter, which reflects that market has discounted the negative performance registered earlier.

Tisco registered a net gain of 4.44 per cent to close at Rs 87. Rumours of anti-dumping duty has led to a substantial jump in the stock price from Rs 80 levels on Tuesday.

Brokers also explained that since a considerable portion of the long positions at the market were already dumped during the past two consecutive sessions, it paved the way for some fresh buying at these counters.

It should be recalled that although institutions both domestic and foreign were net buyers on November 2 and 3, the index was range bound on account of heavy offloading by local punters. Institutionswere net buyers on the BSE with domestic institutions' bringing in fresh funds to the tune of Rs 6 crore, while the FIIs were net buyers to the tune of Rs 26 crore.

Bears however continued to tighten their grip on the Ranbaxy Labs counter, with the stock registering a further price erosion of 4.36 per cent to touch a low of Rs 452.80. According to market sources a leading UK based FII has been liquidating its holding in the company on the basis of the flat results announced by the company, especially in comparison with other pharma companies.

"Individual stocks seems to have kickstarted the upward rally, this is a positive indication," explained Sandeep Shah of Kotak Securities.Reflecting the recovery made by individual stocks, Ashok Leyland, IPCL, LML, Raymond Woolen, PSI Datasystems and Vikas WSP hitting the upper end of the price band on the local bourses.

Rumours of a likely merger with Punjab Tractor saw the Swaraj Mazda counter flare up. The stock hit the upper end of the price band at Rs 38.40.