However, FIIs continued to be net buyers on the local bourses with their net purchases pegged at Rs 20 crore on the BSE. Domestic institutions were net sellers to the tune of Rs 17 crore. While the figures of institutional transactions on the National Stock Exchange were not available, market sources pointed out that domestic institutions sold heavily on the NSE.

"It is a positive sign that domestic institutions are booking profits while the FIIs are still buying at these levels. The market can be rest assured of adequate institutional support in the long run when FIIs turn sellers," said a veteran BSE broker.

ACC continued to hog the limelight as the company announced a robust third quarter result. Before the announcement of the result the stock breached the crucial barrier of Rs 1,200 however, theimmediate reaction to the results saw continous bouts of sales being pressed at the higher levels. On the BSE the stock closed at Rs 1,148 with a phenomenal volume of 4.42 lakh shares.

However, on the NSE the stock closed a shade lower at Rs 1,136 registering a net gain of 0.97 per cent.

Heavy weight index based stocks like Hindustan Lever, Glaxo, Bhel, Tisco, Larsen, Hindalco, Bajaj Auto, Reliance, SBI, Bhel and Castrol recorded substantial chunks of institutional buying. However, profit booking by domestic institutions like UTI, LIC, SBI Mutual Fund and Canbank led to minor correction towards the last phase of the session.

Among the info-tech stocks NIIT, BFL Software, Aptech, Digital Software were locked at the upper limit of the daily price band. Rumours of an open offer to be made by Compaq at Rs 215 saw Digital Software hitting the circuit limit of Rs 185.80 on the local bourses. However, the rumours could not be confirmed.

Buy back candidates like SBI and Eicher India also found favour amongfund managers who want to avail of the benefits of the pre-budget rally. In anticipation of sops for the auto-ancilliary sector, punters rushed to create fresh positions at the counters of Motherson Sumi. The stock was locked at Rs 37.40 on the NSE.

"Considering the upbeat mood of the market the index should touch 3,433 points during the latter part of this week and before the budget the index is bound to trade at 3,550 levels," said the director of Kaji & Maulik Securities, Himanshu Kaji. Sentiments continued to be buoyant at the GDR markets with GDRs of BSES, Larsen and ITC trading at a premium of over 1 per cent against their opening prices.

FII inflows sustained

Foreign institutional investors appear to be gradually taking their position in the Indian stock markets. Figures released by the Securities and Exchange Board of India indicate that FIIs are taking a positive view of the Indian market though with a great degree of caution.

During the first three weeks of January, the net inflow ofFII funds was $ 88.9 million or Rs 378 crore. The sustained inflow of FII funds into the market has helped prevent the Sensex from falling below the 3200 level. This is notwithstanding heavy profit booking resorted to by domestic institutions. During the first week of January, the net FII investment was $ 20.4 million. The net investments picked up to $ 35.9 million and $ 32.5 million in the following two weeks.

One of the reasons for the caution exercised by the foreign investors is the uncertainty shrouding the economy and the prospects of a tough budget.