Sensex, Nifty scale new highs; blue-chip stocks rise

The BSE Sensex and Nifty rose to a record high for a seventh consecutive session as blue chips such as Larsen & Toubro extended a rally after the Reserve Bank of India (RBI) left interest rates unchanged and said it did not expect policy tightening in the near-term.

The RBI has raised the repo rate by 75 basis points since September to contain high inflation, but analysts had expected the central bank would keep rates steady ahead of general elections and an uncertain economic growth outlook.

India's record-setting share rally has been sparked by heavy foreign buying - reaching a $3.3 billion in March - as analysts cite expectations of a recovery in the domestic economy, and bets that main opposition Bharatiya Janata Party, perceived as more business-friendly, will come to power.

However, analysts warn momentum could eventually wane, with investors on Tuesday also booking profits in recent outperformers such as banks. Data on Tuesday showed manufacturing activity grew at a slower pace in March as weaker domestic demand dragged on output growth.

"We continue to believe that till the election result is clear, index will remain in the sidelines and bulk of the action will be witnessed in mid and small caps," Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.

Profit booking in banking stocks is only a near-term phenomenon, added Nair.

The BSE Sensex rose as much as 0.44 per cent to an all-time high of 22,485.77, while Nifty gained 0.41 per cent to a record high of 6,732.25.

Sensex ended 0.27 per cent higher while Nifty ended up 0.25 per cent.

Among blue chip stocks, Larsen & Toubro gained 0.6 per cent, while Tata Consultancy Services rose 2 per cent.

Reliance Industries rose 1.3 per cent and Tata Motors ended 1.1 per cent higher.

Mahindra and Mahindra gained 2 per cent after the company said its domestic tractor sales rose 7 per cent to 16,571 tractors in March.

Kalpatru Power Transmission rose 2.3 per cent after the company on Monday said it had received new orders of over Rs 700 crore.

Still, investors also took profits on recent outperformers such as Hindalco Industries, which fell 2.5 per cent on profit taking after rising 8.3 per cent on Monday.

Punjab National Bank ended down 1 per cent after being the best performer of the NSE in March with a 35 per cent rally.

Among other stocks that fell, Natco Pharma fell 14.22 per cent, after the US Supreme Court on Monday agreed to hear an appeal filed by Teva Pharmaceutical Industries in a patent fight over top-selling multiple sclerosis drug Copaxone.

Copyright Thomson Reuters 2014