``Technically, the market seems poised for a rally and by January-end the index should be trading in the 3,500 zone,'' said Neel Dalal, BSE broker. ``A technical resistance is expected at 3,280 levels. However, if the institutional support comes in as expected by the market, the rally would continue for a longer period,'' he added.

FIIs were net buyers on both the local bourses, while net purchases at the BSE totted at a high of Rs 57 crore. On NSE, FIIs were net buyers to the tune of Rs 4.75 crore. Domestic institutions sold heavily on NSE onthe first day of the trading cycle of the exchange. Domestic sales were marked at a high of Rs 31.5 crore.

Hindustan Lever appreciated by over 6 per cent on bonus rumours with a phenomenal trade volume of over 10 lakh shares on the two leading exchanges of the country. Around 1.15 pm, the market was agog with rumours that the company was likely to consider a bonus issue while announcing its results in the first quarter of February. Within a span of 20 minutes, the stock shot up from Rs 1,700 to trade at a new 52 week high of Rs 1,799. However, with a clarification that the company had not intimated the bourse regarding a bonus, the stock witnessed a minor correction to close at Rs 1,754.50.

According to market sources, leading FIIs like James Capel and Socgen Crosby placed huge buy orders at the counter, which was reflected both on the price and the volume. However, the deals could not be confirmed.

``It has become a regular phenomenon now that we have quarterly results. Having analysed the company'sperformance, expectations of a bonus are discussed loudly which spreads across the market and the fall-out is the volatile price movement,'' explained a senior official of BSE.

ITC also breached the crucial barrier of Rs 800 backed by institutional purchases at the lower levels of Rs 784. Similarly, institutional purchases were reported at the counters of Burroughs Welcome, Emerck, Cadbury, Glaxo, Pfizer, Knoll Pharma and BFL Software. Among pharma stocks, E-Merck and Aurobindo Pharma registered huge negotiated deals on the BSE.

Rumour-mongers shift focus to ITC

Sentiments improved in kerb deals on rumours that ITC had decided to hike the prices of some of its popular cigarette brands. Market was agog with rumours that the price hike would be in the range of 5-9 per cent.

Reflecting the buoyant mood of the market, ITC shot up from a low of Rs 794 registered at 5.30 pm to trade at a high of Rs 800/801 at 7.15 pm against its official close of Rs 796.75. Similarly, other pivotals like SBI,Reliance and Satyam were also traded at a premium of over Rs 2.

Meanwhile, the GDR markets continued to be strong for the second consecutive day with the Skindia GDR index trading at 633.94 points during mid-session. While the GDR indices shot up by over 2 per cent, the ITC GDR registered a sharp rise of over 3 per cent to trade at $ 24.60.

The GDRs are quoting at premium of 31.3 per cent against its underlying stock price.