The Sensex opened the day at 3,922.71, up 21 points from Tuesday's close. It recovered from a low of 3,876 touching a high of 4,031 before closing at 4,021.40 points, up 119.67 points from Tuesday's close. SBI topped the turnover chart on BSE at Rs 180 crore.

``The sentiment was weak in the morning and we were surprised by the surge in buying which came in the last few hours. There was sudden euphoria in the market and the rumour of a CRR cut provided the trigger,'' said a BSE broker. FIIs' net purchases to the tune of Rs 42 crore on Tuesday despite a falling rupee added to the market's confidence.

``The undertone of the market is strong andthere are strong signs of recovery. However, it will be sometime before a certain amount of stability comes back to the market,'' added Amit Shah, AVP Triumph International Finance.

``With US President Bill Clinton issuing a stern warning to Pakistan and pro-India signals from China, a perception is gaining ground that Pakistan will now be forced to withdraw from the Kargil region,'' said a BSE broker. ``If there is no further unpleasant news from the border, the market will see a straight run to 4300-level. The market is expecting a ceasefire on the broder in the next few days,'' added another broker. The buying spree was aided by reports of American Senate formally ratifying lifting of sanctions against India.

Buying was concentrated in select counters like SBI, Telco, Tisco, HLL and Mahindra & Mahindra. While pharma scrips also showed signs of firming up, software stocks put up a poor show. ``Software stocks are expected to pick up once we are closer to the declaration of Q1 results,'' said a dealerwith a local brokerage. Sources pointed out that FIIs like Morgan Stanely and Alliance Capital have pressed the sale button on software counters, which is likely to continue for next couple of days.

While SBI hit the upper end of the circuit filter on both National and Bombay Stock Exchanges, there was an outstanding buyer for 5,000 shares at the HLL counter. Market sources point out that FIIs like Credit Lyyonais, Jardine, Morgan and Capital International were active at select counters. Tisco gained Rs 5.40 with a volume of 69 lakh shares on BSE driven by reports of firming international steel prices.

According to broking circles, FIIs were also active at the counter of Hindalco as international prices of aluminium have risen by around $81 in 15 days. Hectic activity was also witnessed at counters of Mahindra & Mahindra and Punjjab Trcators. The M&M counter hit the upper end of the circuit filter at Rs 272.25 on the BSE while there was a negotiated deal of 25,000 shares valued at 3.05 crore (price of Rs1220) at Punjab Tractor counter. ``With a bumpoer crop and normal monsoon, the market expects a jump in sale of tractors,'' said a broker.

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Rupee rebounds

The rupee rallied by 19 paise on Wednesday to close at 43.14/16 as US president, Bill Clinton's statement that Pakistan must stop its infilteration was seen as defusing the tension on the border. Opening the day at 43.28/31, slightly stronger from its overnight close at 43.32/33, the rupee gained as corporate interest for dollars waned even as the State Bank of India and other banks cut long-dollar positions. Forward premiums also quoted softer on Wednesday in line with a stronger spot-rupee, and the six-month annualised forward cover closed at 5.15 per cent (5.55 per cent).