The markets opened weak but staged a smart rally on aggressive purchases by domestic financial institutions, mutual funds and investors including operators at lower levels.

Dealers termed Wednesday's correction as a relief rally but they were cautious about its sustainability. They said the market was still in the weak zone and that it will take at least another two settlements to come out of the weak zone.

The Sensex closed the day at 3725.03 points, after touching an intra-day high of 3757.12 points. At the National Stock Exchange (NSE), the S&P CNX Nifty gained 69.5 points to close at 1124.7 points.

The sharp rise in the Nasdaq Composite Index and the Dow Jones Industrial Average also brought fresh life to the market. This coupled with aggressive purchases by DFIs and mutual funds at the behest of the government helped to raise the sentiment. The market also witnessed significant trading activity from the FIIs mainly on the technology counters. Among the old economy sectors, cement and steel stocks were in the limelight scoring sharp gains. ACC was the highest gainer among the cement and index stocks. It was locked in the upper circuit of 16 per cent at Rs 157.50. Other cement stocks which gained significantly included Grasim (10.75 per cent) at Rs 298.75 and Gujarat Ambuja (9.4 per cent) at Rs 174.55. Among the other major gainers, NIIT shot up by 16 per cent on the back of huge institutional buying to close at Rs 834.75. Zee Telefilm also moved up by 14.78 per cent as FIIs re-entered the counter and it closed at Rs 126.95. Other new economy stocks like Satyam Computers and Infosys werealso in demand and gained by 13.36 and 9.94 per cent respectively to close at Rs 230.75 and Rs 4708.75 respectively.

Stocks of companies in the infrastructure sector was also in demand. The SAIL stock jumped 20 per cent to close at Rs 6.05. Tata Steel also gained 11.20 per cent to close at Rs 124.65.