FIIs, who had flocked out of the country post-Pokharan-II, are trooping back post-BJP Government fall. The result: net FII inflows were Rs 2,587 crore since the beginning of 1999. This has wiped the slate clean after Rs 1,479 crore went out of the markets in calender 1998.

In the first week of May alone, over Rs 550 crore poured in from FIIs, laying the foundation for a nine-day uninterrupted rally which drove the Sensex up to 3,820 points. Market players and domestic fund managers do not see this as a dizzying height and are prepared for a further climb.

Arun Kejriwal of Woodstock Securities draws attention to the quality of purchases, which haveimproved substantially, reflecting the net outstanding positions at the exchanges. "The net outstandings have been actually falling, mirroring delivery-based purchases. By September, even before the new government is formed, the Sensex should make an all-time high."

K Ranjeet, fund manager, Kotak Mahindra AMC, expects the market to go up by another 100 points while Ved Prakash Chaturvedi, chief investment officer, SBI Mutual Fund, points to how the FII buying has spread to commodity stocks to pharma counters on Monday. "This shows that bargain hunting and value picking is continuing. We should see this happening in the near term," he adds.

Ameet R Dalal of MBD Securities, who expects the rally to continue, points to its peculiar feature: "First it was infotech stocks, followed by pharma and FMCG and, now, cyclical stocks. The next sector should be automobiles." Maulik Sharedalal, director, Kaji & Maulik Securities, notices a morning star on the Sensex weekly charts, suggesting the index ending its currentuptrend at around 3,912 points facing resistance from the downtrend line drawn on the weekly charts from the high of 4,605 points in August 1997.

"On downmoves we do not expect the Sensex to fall below the 3,640-3,674 band of past levels." Saumil Trivedi of Dilvikas Finance too looks at the charts, waiting for a confirmation in the next 2-3 sessions and expecting the rally to last up to 4,300-4,400 levels. ``A correction of 100-200 points is however not ruled out in the mid-term. One needs to now look at the barometer of the market namely, Reliance.''

Parag Parikh, chairman of PPFAS, strikes a note of caution stating that although the sentiment looks bullish backed by FII money, the fundamentals of the economy have not changed much. ``A correction looks overdue.'' Hitesh Zaveri, assistant vice-president, research, Apple Mutual Fund, sees the market consolidating at current levels, with focus shifting to select stock picking.

Prashant Jain, Fund Manager, Zurich India Mutual Fund, takes a longer-termperspective: ``We believe that over a 3-4 year period the index should perform well."

The large FII inflows show party politics has less impact on the economy and capital markets. The new government has to take a decision on the insurance bill, patents bill and others, which may not have much tangible impact on the markets.

``With free pricing in place, customs duties at moderate levels, no licensing regime, free imports and capital markets deregulated from pricing controls, the markets are not in government control to a large extent. This is being realised by FIIs and investors as compared to 10 years back when the licence for manufacturing a product given by the government determined profits of corporates."