Blue-chip equities snapped a two-day losing streak on the Bombay Stock Exchange (BSE) Tuesday amid renewed domestic as well as select foreign institutional buying, encouraged by better-than-expected quarterly result posted by Infosys Technologies.

The benchmark 30-share sensitive index or Sensex closed at 3,328.27, a gain of 37.46 or 1.14 percent over its previous close.

According to dealers, the market sentiment was revived by impressive financial results for the quarter ended June announced by Infosys, India's second largest software developer and exporter, before the opening of the trading session.

Infosys reported a 50 percent rise in net profits for the April-June quarter on Tuesday. Profits were pegged at Rs.1.9 billion, beating market expectations. Net profit rose 4.4 percent from the previous January-March quarter, compared to expectations of a mere 1.45 percent increase.

"The market was waiting for a positive trigger and the strong quarterly result announced by Infosys Tuesday could well create the ground for sustained rally in the next few sessions," a stock market analyst said, adding an overnight recovery on the tech-heavy Nasdaq stock exchange also buoyed sentiment.

Shares of Infosys Technologies initially jumped as much as 3.7 percent to a high of Rs. 3,650 in reaction to the quarterly results. But they eventually closed down 0.7 percent at Rs. 3,494.85 after the company said it faced pricing pressures because of slowdown in technology demand.

"The investors reacted in panic when Infosys announced that its billing rates were coming down. But I think the counter will stabilize tomorrow as the operators look at the overall growth prospects of the company," said a fund manager with a brokerage house.

In the new economy sector, media major Zee Telefilms gained 3.23 percent to Rs. 95.85. Polaris Software was up nearly five percent to Rs. 208 after the company informed that the U.S.-based Small-cap World Fund had acquired a 5.1 percent stake in the company.

Buying was also witnessed in tech shares such as Hughes Software, Aztec Software, Sonata Software, Silverline Technologies, Digital Equipment, Sierra Optima, Wipro, HCL Infosystems, Rolta India, Aptech, Pentasoft Technologies, Mascot Systems, PSI Data Systems and Ramco Systems.

In the old economy sector, India's diversified business conglomerate Tata group's subsidiaries Tata Engineering rose 7.6 percent to Rs. 72.50 and Tata Steel gained 7.5 percent to Rs. 104.65 on bargain hunting at lower levels.

Select domestic drug companies' shares rose after New Delhi-based Ranbaxy Laboratories, the nation's largest drug maker by sales, Monday reported a better-than-expected 22 percent rise in net profit for the quarter ended June.

Ranbaxy closed up 2.52 percent to Rs. 494.20 while Cipla Ltd rose 3.72 percent to Rs. 1,119.45.

Shares of Videsh Sanchar Nigam Ltd., the state-run overseas telephony, rose 4.04 percent to Rs. 317.85, driven by the company's announcement of a special dividend of Rs. 40 per share in addition to a normal Rs. 10-dividend.

The NYSE-listed VSNL also revised upwards its audited net profit for the year ended March 31, 2001 to Rs. 17.79 billion, up from Rs. 15.78 billion reported in April.

Other major gainers in the sector included Mahindra and Mahindra, Reliance Industries, Reliance Petroleum, Grasim Industries, Larsen and Toubro, Nestle, Hindustan Lever, Colgate-Palmolive, and ITC.