Mumbai, Jan 18 Despite paring gains on the back of profit booking, the key Indian equity indices -- the BSE Sensex and Nifty50 -- managed to close at new highs on Thursday led by healthy buying in banking stocks.
According to market observers, positive Asian markets, coupled with inflow of foreign funds and upbeat quarterly corporate earnings, lifted the benchmark indices to record highs during the mid-afternoon trade session.
However, a sell-off during the last hour of trade pulled the benchmark indices lower from their highs to close with decent gains.
The wider Nifty50 of the National Stock Exchange closed above the vaunted 10,800-mark. The index edged higher by 28.45 points or 0.26 per cent to close at a new closing high of 10,817 points.
The Nifty50 scaled a new level of 10,887.50 points during the intra-day trade.
On the BSE, the barometer 30-scrip Sensitive Index (Sensex) closed at a new high of 35,260.29 points -- up 178.47 points or 0.51 per cent -- from its previous session's close.
The Sensex also touched a fresh intra-day high of 35,507.36 points.
However, the BSE market breadth remained bearish as 2,301 stocks declined as compared to 663 advances.
In the broader markets, the S&P BSE mid-cap index fell sharply to close lower by 1.69 per cent and the small-cap index by 2.04 per cent.
"Markets ended with modest gains on Thursday after a positive opening. The main indices initially witnessed a gap-up opening on the back of positive Asian markets. A sell-off from the highs curbed the gains for the day," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.
"Nifty rose in the morning led by bank stocks on positive global cues and reports indicating that the government is mulling a proposal to hike foreign direct investment (FDI) limit in the banking sector," he added.
Reports on Wednesday said the government could allow 100 per cent FDI in private banks and also consider increasing the permissible limit for FDI in public sector banks to 49 per cent from the current 20 per cent.
Anand James, Chief Market Strategist, Geojit Financial Services, said: "Government's plan to not widen the net borrowings gave additional legs to market that has been pricing in the potential for further fiscal deficit slippage.
"FDI plans for banks and GST meeting also meant that indices opened with a gap-up, but such successive days of record peaks attracted profit booking following a mixed bag of earnings and approaching derivatives expiry."
On the currency front, the Indian rupee strengthened by three paise to close at 63.85 against the US dollar from its previous close at 63.88.
Provisional data with the exchanges showed that foreign institutional investors purchased scrips worth Rs 1,894.99 crore, while domestic institutional investors divested Rs 657.46-crore scrips.
"The rally in banks was also supported by the government's decision on Wednesday to trim additional market borrowing by 60 per cent for the ongoing fiscal year ending March," Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
Sectorwise, the S&P BSE banking index surged by 205.78 points, FMCG index by 79.15 points and finance index by 33.57 points.
On the other hand, the S&P BSE metals index slipped by 447.33 points, consumer durables index by 241.51 points, and oil and gas index by 220.70 points.
Major Sensex gainers on Thursday were: ITC, up 2.61 per cent at Rs 272.85; HDFC Bank, up 2.15 per cent at Rs 1,931.80; HDFC, up 1.99 per cent at Rs 1,897; Mahindra and Mahindra, up 1.83 per cent at Rs 758.70; and Kotak Bank, up 1.77 per cent at Rs 1,045.40.
Major Sensex losers were: Adani Ports, down 4.32 per cent at Rs 414.35; Tata Steel, down 2.89 per cent at Rs 751.85; Coal India, down 2.81 per cent at Rs 283.10; Sun Pharma, down 1.22 per cent at Rs 576.25; and State Bank of India, down 1.18 per cent at Rs 302.75.