ObservableCollection replace item SelectedIndex bug when bound to DataGrid

It seems that when an item in an ObservableCollection is replaced, the SelectedIndex of the bound DataGrid is set to -1.

//Here SelectedIndex is 4

obColl[4] = newItem;

//Here SelectedIndex is -1

Someone else had the same issue as below:

http://social.msdn.microsoft.com/Forums/vstudio/en-US/024730d9-ea79-4231-a006-2f901c61f546

Tried a workaround by explicitly re-selecting the new replacement item in the DataGrid. However, this is causing some nasty side-effects like DataGrid is selecting multiple items after replacement. Any inputs appreciated!