As soon as the market opened on Monday, the short-sellers were quick on their feet. They covered their positions smartly before falling prey to the shift in sentiment. A week-end assessment of the ground realities after five rounds of air-strikes provided fodder for the `feel good' theorists in the market to pull up the Sensex dramatically. More, short-sellers could sense UTI breathing down their necks and FIIs waiting in the wings to pick up at every fall. Lower badla rates provided ammunition to those who wanted to take a long shot as the new settlement on the BSE commenced.

According to market participants there was heavy short covering and speculative activity was at its peak across the board as stockprices opened the day with a gap.

"Even though the Kargil issue has been put to the background but there is uncertainty. The market will be dictated by news from the Kargil front. Influenced by the Kargil issue the markets will move in a range of 200 points from the current level," said Dilip Bhat, a BSE broker.

The BSE Sensitive Index opened with a gap at 3,835.33 and fluctuated widely in a range of 3,966.14 and 3,835.33 before closing at 3,963.56 compared with Friday's close of 3,773.32, registering a sharp rise of 190.24 points or 5.04 per cent. The S&P CNX Nifty also went up by a huge 50.80 points closing at 1,132 against its previous close of 1,081.50 points registering a rise of 4.70 per cent.

Malay Sameer of Apple Financial Securities said, "The news from the FII front is positive which can be seen from the FIIs buying Indian GDRs, a clear indication that FIIs have not taken a negative view of the markets. FIIs seem to have realised that even with the war the fundamentals of the economy will notchange. Additionally, the cross border equity inflows from the FIIs into the emerging markets has continued to be strong. This shows that the undertone of the market will remain to be bullish barring any negative news from Kargil".

Brokers also pointed out that market recovered on reports that India had accepted an offer of talks with the Pakistani foreign minister to discuss the development on the border. "Market also got the news that civil flights had been resumed to Srinagar allaying further fears of a war," said Chetan Shah, a BSE broker.

Amit Jain a BSE broker said the Sensex on Monday refrained from penetrating the last week-end low of 3,675 which had been considered a crucial support level.

According to VVLN Sastry, vice-president, Khandwala Securities: "The markets spurted mainly based on four reasons: status-quo on the Kargil front, lower badla rates, specultive buying and short covering. The outstanding long positions on the market are also very low at Rs 975 crore suggesting that the marketswill remain stable at the current levels".

The day was marked by the pivotals rising sharply with Reliance hitting the upper limit of the circuit breaker at Rs 167.35 for a short while on speculative buying and SBI joined the bandwagon striking upper circuit for a while at Rs 243.50 before retreating. The two index heavyweights ITC and HLL were firm on short covering.

Another highlight of the day was the resurgence in software scrips with frontline software counters like Satyam Computers, Pentafour Software, NIIT and Infosys Technologies recovering. Second rung software counters like Silverline Industries at Rs 198.70, KLG Systel at Rs 175.15, Maars Software at Rs 311.75, DSQ Software at Rs 231.25, Orient Information at Rs 60.70 and CMC at Rs 315.10 hit the upper circuit on BSE.

Additionally, the pharmaceutical and FMCG sectors also registered a good amount of smart recovery on speculative buying and short covering.

As a result of the sharp upsurge, 19 specified scrips including index scrips like RIL,Tisco, Telco, SBI, MTNL, L&T, Grasim and Glaxo hit the upper circuit. Out of 148 specified shares, 142 showed gains while four recorded fractional losses and others held steady.

UTI to pump in Rs 810cr

Mumbai, May 31: Unit Trust of India has started pumping funds into the market in a big way. An estimated Rs 810 crore is expected to flow into the stock markets from UTI. Sources confirmed that UTI stepped in last Friday as an active buyer and continued to do so on Monday too.

But what the market has seen is only a tip of the iceberg. "UTI still has large funds to pump into the market," said a source. Thanks to the resounding success of UTI's Monthly Income Plan, the mutual fund giant collected a whopping Rs 2,700 crore. With Sebi permitting UTI to retain the entire amount, the fund flow from UTI to the stock markets will pick up now.

UTI can invest upto 30 per cent of the MIP collections in equities. This translates into a whopping Rs 810 crore.

With FIIs adopting a wait-and-watch the flow offunds from UTI is expected to absorb any negative news that may crop up in the next few days. In the absence of redemption pressure from US-64, fresh investments from UTI will mean net addition to the market.