A strong close on Friday and the likelihood of positive corporate announcements have perked up the market's optimism despite selling by institutional investors, they said.

"I see a 100-200 point rise for the index in the near term and then a correction. Longer term, the market looks very bullish to me," said Satish Menon, senior vice-president at Geojit Securities Ltd.

The bellwether Bombay Stock Exchange index rose 2.40 per cent or 111.45 points on Friday to end last week at 4,764.67, a marginal 35 points rise on a week-to-week basis.

The index has bounced more than 24 percent from an 11-month low of 3,831.86 hit in late May but is still some 23 percent below its all-time high of 6,150.69 touched in February.

Technology shares have led the rally with the Bombay exchange's sector index of 33 leading information technology (IT) shares jumping more than 10 percent last week to end at 3,915.98.

"A number of IT shares, which were consolidating for the last few days, have penetrated through resistance lines. This shows movement in infotech stocks will continue in the early part of next week," Triumph International said in a report on Saturday.

It said the index has two major resistances, at 4,800 and 4,910, of which the first is likely to be penetrated easily.

Likely to lead activity this week are Infosys Technologies, which gained 7.2 percent last week at Rs 8,429.70, Satyam Computer, up 4.7 percent at Rs 3,367.55 and NIIT, up 9.7 percent at Rs 2,424.65, analysts said.

They said the markets were cheered by the possibility of an early US listing of state-run telecoms firm Mahanagar Telephone Nigam Ltd (MTNL) and divestment of the government's stake in it when the cabinet committee on disinvestment meets on June 23.

MTNL, whose shares surged 12 percent to Rs 244.95 on Friday, has said it would list on the New York Stock Exchange by the third week of June.

Bank stocks are likely to be in demand ahead of solid annual results expected to be unveiled on June 22 by State Bank of India (SBI), the country's biggest commercial bank.

A Reuters poll of 15 brokerages in March forecast a 66 percent rise in SBI's net profit to Rs 17.09 billion ($382 million).

Focus on wobbly rupee, FII activity
Some dealers said Foreign Institutional Investors (FIIs), who have sold a net $112.6 million worth of equities in June till Thursday compared to net purchases of nearly $650 million in the last two months, were waiting for the rupee to stabilise before turning buyers again.

The Indian currency ended at 44.695 against the dollar on Friday and has declined over 2.5 percent gradually since early May.

"The FIIs have definitely looked at the rupee fall alarmingly," said Arun Kejriwal, chief dealer at Nikko Stock Broker.