Mumbai: After a two-week slide, the SENSEX staged a partial recovery concluding the week higher by 0.90 per cent in line with a sharp rally in majority of index-based stocks on the Bombay Stock Exchange (BSE) during the week on sustained net purchases by foreign funds.

Though the underlying tendency was getting optimistic before the presentation of the Union Budget at the end of the month, coupled with increased activity by foreign institutional investors (FIIs), the growing threat of US-led war against Iraq triggered selling by speculators and domestic funds, which have been booking profits in key stocks.

Operators avoided making any major commitments in view of the repeated US rhetoric of a military strike by making a presentation of evidence on weapons of mass destruction to the UN Security Council that followed a strongest-ever warning by the US President George W Bush saying "the game is over".

Had it not been for sustained net investments by FIIs, which have made net purchases of Rs 290 crore in the first four sessions, the market would have witnessed panic selling.

The New York stocks dropped consecutively for four sessions till February 7 onwards, ending the week with a fall of about 190 points in the Dow Jones industrial average and 38 points in the NASDAQ composite index.

The sentiment was well supported by possibility of a liberal policy of tax incentives for pension schemes and a likely meeting of the Cabinet Committee on Disinvestment (CCD) before the Budget session beginning February 17, for finalising transaction documents for disinvestment of Shipping Corporation of India (SCI), Hindustan Copper and Engineers India Ltd (EIL).

Analysts felt that the market was unlikely to witness a major rally ahead of the Union Budget, which is expected to be market-friendly for the sole reason that the tension between US and Iraq will have sentimental impact on bourses.

World crude oil prices, already boosted by Iraqi war fears, have bolted to a two- year high as snowstorms took supply-short heating oil prices to the highest level ever.

The BSE benchmark 30-share index had rallied past 3,300-level to the weekly high at 3,311.18, but later fell back to end the week at 3,279.77 as against last weekend's close of 3,250.38, netting a gain of 29.39 points.

PTI