Mumbai: Coinciding with a marked fall in inflation rate, stocks today (Sep 17, 2004) rallied sharply aiding the sensex to take a leap of 83 points to end the session at four-month high at 5561.15 on heavy purchases by Foreign Institutional Investors (FIIs) and fresh buying support from operators.

The sensex's closing level is the highest after May 7, 2004, when it ended at 5669.58.

The BSE Benchmark 30-share Index opened remarkably higher at 5489.12 and later spurted to the intra-day high of 5569.47 before ending the day 5561.15 as against yesterday's close (Sep 16, 2004) of 5477.68, a net rise of 83.47 points or 1.52 per cent.

FIIs, which have stepped up activity on bourses and made consistent net investments in the month, reportedly were heavy buyers in index-based counters, particularly ITC, Tata Motors, SBI, RIL, Tata Steel and HDFC.

Operators and retail investors were believed to be making large commitments in mid-cap stocks for the last couple of sessions, brokers said.

Attributing the momentum in up trend to increased FII activity in the week, brokers said news that the inflation has fallen by 0.52 per cent to below 8 per cent for the week ended September four, is come as a shot in the arm for investors.

The Wholesale Price Index (WPI) inflation fell to 7.81 per cent after touching 8.33 per cent in the previous week.

Meanwhile, IT stocks came under pressure in view of a sharp appreciation in the rupee against the US Dollar.

Infosys Technologies, Satyam Computers, Ranbaxy Lab, ACC and a few others suffered a moderate setback due to selling pressure.