Market observers commented that this was perhaps the first time when a liquid counter like ITC hit the upper end of the circuit filter on the bourses. On the BSE, the stock shot by over 7.8 per cent to trade at the highest bid of Rs 779.50 before closing at Rs 778.25.

The rally which kicked off at the ITC counter left a positive impact on the market sentiment with the 30-share Sensex breaching the 3,100 mark to register a high of 3,118.59 points. In the final countdown the index closed at 3,110.33 points witnessing a net gain of 64.04 points. Interestingly, while market attributed the rally to large scale FII purchases, the figures released by the local bourses highlighted that the institutions were net sellers. While FIIs were net sellers to the tune of Rs 20 crore, domesticinstitutions sold stocks worth Rs 14 crore on the local bourses.

ITC, traded in the band of Rs 725.30 and Rs 779.50, on the BSE. The counter clocked a phenomenal volume of over 1.12 crore shares, with a major chunk of the contribution coming from the NSE where the counter registered a volume of 68.66 lakh shares.

While market was agog with rumours that Morgan Stanley broking has placed huge purchase orders at the counter during the initial phase of the trading session, the rumours of the long pending excise case getting resolved also added fuel to the rally. Besides ITC, other subsidiaries like ITC Agro, ITC Bhadrachalam and ITC Hotels also shot up to be locked at the day's highest price on the NSE.

Interestingly, the sharp rise at the counters of Philips and Bata India was also attributed to the buying interest by leading FIIs like Morgan Stanley and Jardine Fleming broking. Both the stocks hit the upper end of the price band on the local bourses.

"The speculative element cannot be ruled out.However, the calculated risks have been based on the hopes that FII inflows would be positive. Moreover technically also the market is poised for a rally above the 3,100 mark," explained Saumil Trivedi, of Dilvikas Finance.

Rumours of the big bull having diverted a part of his purchase orders to the banking stocks led to a fresh rally at these counters. While pivotals like SBI registered a sharp gain of over 3.8 per cent to close at Rs 164, other banking stocks like IndusInd Bank, Bank of India, Bank of Baroda, Bank of Madura, Corporation Bank and Global Trust Bank were locked at the day's highest bid at the local exchanges.

Even as technical analysts explained that the index has already bottomed out and is poised for the next correction at 3,265 levels where a strong resistance is expected stocks registered sharp losses at the kerb.