For the FIIs, the current 3000-level provides yet another exit opportunity and they have reasons to do so. FIIs usually book profits towards the second and third week of November, sometimes extending into the first few days of December.

The current rally itself is driven mainly by operators based more on speculation rather than any substantial inflow of money. The recovery is concentrated mainly in those cases where the scrips had touched all-time lows or decade lows. There is as yet no firm indication of a recovery in the industrial growth rate or for that matter in exports. Themarket has been reacting to bits and pieces of information flowing in. Among others, buyback, possible pick-up in demand in the auto sector and the package announced by the Prime Minister last month have helped the sensex recover.

The recovery has been hesitant, based mainly on the hope that the downside is limited in many pivotals. The buyback game is far from reality even though the Companies Act has been amended and the SEBI has announced the guidelines. Based on the guidelines, the process of buying back itself will take months. Apart from the disclosure norms, companies have to maintain an escrow account and the pricing will be decided by the shareholders. All these mean that the buyback trigger is speculative and limited. Now, the focus will shift to specific companies. The market has been betting on traditional bluechips including Reliance Industries, Tisco, Telco, ACC etc with the focus shifting away from the software and pharma stocks. More important, the current rally itself comes at a time whenFIIs have been net sellers. The support from domestic institutions has also been limited or marginal in the last couple of days. In two days, the sensex has risen by around 120 points and on both these days FIIs have been net sellers. Most of the bulk selling by FIIs is over. The FIIs pulled out nearly $ 135 million from equities alone during October. The result: the sensex went to a low of 2764. The downside from here being limited, speculative buying has helped it recover over 240 points. Till November 10, the net FII investments was a negative $ 5 million. But most of this has been concentrated in the debt segment. For instance, for the week-ended November 6, the FIIs pulled out around $ 7.2 million dollars from debt while the net investment in equities was a positive $ 3.6 million. Another sidelight during the short rally has been that software stocks have been losers, partly because of profit-booking as there was limited scope in the pivotals. Now that the market leaders have gained much of what they hadlost, it is possible that the FIIs shift their focus back to these counters and book profit. It could happen with a negative trigger or could even be a gradual one. In either case, the sensex inching back to the 2800-level cannot be ruled out.