Scrips like Satyam Computers, Pentafour Software and Infosys led the software rally on Tuesday. Barring Software Solutions, all major software companies have bounced back in the last three trading sessions with the spurt ranging from 2.7 per cent to a high of 35 per cent. Gains in the case of Digital Equipment have been as high as 35 per cent in the past few trading sessions, which has been driven for reasons other than the general revival in the software stocks.

Digital Equipment's plan to refocus on software after the worldwide acquisition of Digital by Compaq is driving the stock northwards. Among the other major gainers, Rolta and Pentafour Software have recorded gains of over 10 per cent in the last three sessions on the BSE.

Market participants feel that the interest is flowing back tosoftware stocks after a severe beating the sector's shares witnessed post results. Most of the stocks are lying well below their post-budget highs and have a fair way to go up.

Excellent results coupled with the hammering these stocks witnessed have seen the price-earning multiples come down to realistic levels. Further, scrips of companies like Pentafour Software and Satyam Computers are still trading at cum-bonus prices and are thus all the more attractive.

Satyam Computers, after a two for one share split (1:1 bonus), is available at an effective price of less than Rs 600 per share. So is Pentafour at less than Rs 550.

That software stocks have staged a smart rally is surprising since only a few days back, doubts were being raised by the market and analysts about the future earnings and the capacity of IT companies to maintain extraordinary high earnings. In fact, the leaping net profit figures for the fourth-quarter results failed to catch the market's fancy and the stocks were hammeredruthlessly.

"The levels have turned very attractive, especially after the latest results coupled with the beating software stocks have taken in the past two weeks. The PE multiples of most of the software stocks have reached realistic levels and one should plan an entry at the current levels," said a Delhi-based NSE member.