Foreign Institutional Investors (FII) continued their shopping spree on Wednesday running up a bill of nearly Rs 3,500 crore that sent the Sensex soaring to the 17,000 mark, close to its six week high. Domestic investors, however, preferred to stay away from the party and continued to stay away. The positive momentum saw major institutional investors forced to square of their short positions in the derivative markets. ?The last two days of short covering was followed by fresh buying in the cash market on Wednesday,? said

Deven Choksey, managing director, KR Choksey.

The Sensex eventually closed at 17,000.01, gaining 227.45 points, or 1.36%. The Nifty gained 71 points or 1.42% to end the day at 4,859.

According to BSE?s provisional estimates, FIIs were net buyers to the rune of Rs 959.17 crore, while domestic institutional investors sold shares worth Rs 186.71 crore. FIIs have bought shares worth Rs 3,500 crore on the last two trading sessions. Of the BSE 500, there were around 20 companies managed to hit their 52-week high.

The NSE cash turnover on Wednesday was at Rs 15,289 crore, while the six monthly daily average is Rs 16,074.72 crore. Turnover in derivatives was Rs 67,620 crore and the daily average for the past six months is Rs 76,215 crore. The Nifty March futures again slipped in to discount of 7 points at 5,081 from a premium of 5.8 points it commanded the previous day. Siddarth Bhamre, derivative head, Angel Broking, said, ?It was primarily on account of fresh cash-based buying by FIIs that Nifty futures went in to discount.?

?It?s a positive momentum from the Budget,? said Apurva Shah, vice-president & head of research, institutional equities, Prabhudas Lilladher. ?The Budget has spelled a clear roadmap for fiscal consolidation and disinvestment, and has not raised taxes substantially.? According to Ambareesh Baliga, vice-president of Karvy Stock Broking, it was a sort of relief rally owing to a better-than-expected Budget.

Favourable global sentiments also added to the momentum. Greece Prime Minister?s announcement of an additional $6.6 billion of deficit cuts sent out positive signals. However, concerns still remain. ?We expect the Greece crisis to spread to the euro zone. This could lead to a flight to safety in the dollar-denominated US treasury and funds may flow out of the riskier emerging markets,? said Baliga.

In Asia, shares rallied for a fourth straight session with Nikkei 225 gaining 0.31%. In Singapore, the Straits Times Index gained by 0.38% and Kospi Index in South Korea extended its gains by 0.45%.

The market breadth too remained strong throughout the trading session with 67% or 1,965 stocks traded on the Bombay Stock Exchange ending higher compared with 891 declines.

?The rally is sustainable over a 12-month period but will remain range-bound in the near term. It will be a steady rise led by earnings growth,? said Apurva Shah of Prabhudas Lilladher.

However, Baliga believes the current rally is not sustainable. One reason is that global cues will now drive the market, which will expose the Indian equities to greater risks. To add to that, the situation at home is not that heartening. ?The GDP numbers have not matched up to expectations, inflation is rising and the trade deficit is widening,? said Baliga.