The broader NSE index has hit record highs in each of the previous three sessions, reflecting continued optimism about corporate earnings and a recovery in the domestic economy
Good foreign buying has come despite an uncertain global environment, with data on Thursday showing China's vast factory sector slowed to a three-month low in August.
Overseas investors bought shares worth of $41.4 million on Wednesday, continuing their buying streak for the fifth straight session, exchange and regulatory data showed. They have bought a net $12.64 billion into Indian shares so far this year.
"Markets are getting into the expiry mood as we are nearing the derivative contracts expiry. We will see stock-specific action. I feel enough money is waiting to enter into the market. It is a buy-on-dip market," said Jagannadham Thunuguntla, head of research and chief strategist at SMC Global Securities Ltd.
The broader NSE index ended 0.2 percent up at 7,891.10, not far off from the record high of 7922.70 hit on Wednesday.
The benchmark BSE index closed 0.17 percent higher at 26,360.11, also within touch of the record high of 26,530.67 hit on Tuesday.
Blue-chips led the gains. State Bank of India closed 2.2 percent higher, while Bajaj Auto Ltd ended 3.2 percent up and Sun Pharmaceutical Industries Ltd added 1.5 percent.
State-run oil marketing companies have also gained on the back of weak crude prices. Brent crude oil slipped below $102 a barrel on Thursday, near a 14-month low, on evidence of plentiful fuel supplies and Chinese economic data pointing to slowing demand.
Indian Oil Corp Ltd gained 3.8 percent, Hindustan Petroleum Corp Ltd ended 4.4 percent higher and Bharat Petroleum Corp Ltd added 2.8 percent.
Among other gainers, Titan Co Ltd added 5.9 percent after Morgan Stanley upgraded the watches and jewellery maker to "overweight" from "equal-weight," citing the strength of its Tanishq jewellery brand and its potential to gain market share.
However, shares in steel companies ended lower on weak Chinese data and reports of an increase in iron ore royalty. .
Tata Steel Ltd closed 1.6 percent lower, while JSW Steel Ltd ended down 0.83 percent.
FACTORS TO WATCH
* FOREX-German data brings relief to euro, dollar rise stalls
* Oil falls towards 14-month low near $101 on ample supply
* Euro struggles at 11-month low as dollar reigns supreme
* Foreign institutional investor flows
After breather, Sensex, Nifty rise to end near record highs
(PTI) After taking a day's breather, Indian markets today continued their upward journey with the Sensex rising 45.82 points and the Nifty edging up 15.80 points to end near respective record highs on buying in banking, auto and capital goods shares amid drop in oil price.
Overseas funds continued to chase stocks today after Foreign Portfolio Investors (FPI) bought shares worth Rs 251.36 crore yesterday, as per provisional data.
HDFC Bank, SBI, L&T, M&M, Bajaj Auto, Sun Pharma, Axis Bank and Hero MotoCorp notched up smart gains while HDFC, Sesa Sterlite, Tata Steel, NTPC, Hindalco and Tata Power fell.
"Profit booking and consolidation continued at higher levels. Global cues were mixed, however, lower crude oil prices boosted overall market sentiment," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.
The BSE 30-share barometer resumed almost stable but later rallied to a high of 26,464.80 before falling back to a low of 26,262.52 on weak Asian closing after Chinese manufacturing activity fell to a three-month low in August, as per HSBC's manufacturing purchasing managers index.
However, it bounced back after European markets were trading in positive terrain in late morning deals. The Sensex finally closed up by 45.82 points, or 0.17 per cent, to 26,360.11. Yesterday, it had dipped by 106.38 points.
The Sensex hit its record close of 26420.67 on August 19.
Similarly, the NSE 50-issue Nifty recovered by 15.80 points, or 0.20 per cent, to end at 7,891.10. Yesterday, it fell by about 22 points on profit-taking.
Nifty's record close of 7,897.50
was hit on August 19.
Stocks of steel companies, however, met with selling pressure after government yesterday gave nod to increasing royalty rates on minerals. Soft data from China, the biggest consumer of metals, also took a toll, brokers said.
In oil markets, US benchmark West Texas Intermediate for October delivery was down 27 cents at USD 93.18 while Brent for October eased 26 cents to USD 102.02 in afternoon trade.
On the global front, Asian markets mostly closed down while Europe was last trading up.
Indices from Japan and Singapore closed up while those from China, Hong Kong, South Korea and Taiwan ended down.
European markets, however, bounced back from their early losses and were trading higher. The CAC was up 0.45 per cent, the DAX 0.30 per cent and the FTSE 0.23 per cent.
Jignesh Chaudhary, Head of Research, Veracity Broking Services said: "Local indices recovered from overnight fall as bluechip companies continued to gain after yesterday's pause. Equities overlooked the ongoing crises in Ukraine and Gaza and focused on the positive sentiments. FII buying mainly helped."
Overall, 15 stocks from the 30-pack Sensex ended with gains while 15 others finished in the red. Major gainers were Bajaj Auto 3.15 per cent, SBI 2.27 per cent, HDFC Bank 1.35 per cent, M&M 1.34 per cent, Sun Pharma 1.28 per cent, Axis Bank 1.18 per cent and L&T 0.95 per cent.
Among laggards, NTPC declined 1.86 per cent, Sesa Sterlite 1.73 per cent, Tata Steel 1.62 per cent, Dr Reddy's Lab 1.52 per cent, Hindalco 1.36 per cent, Tata Power 1.11 per cent and Bharti Airtel 0.79 per cent.
Speaking on Sensex and Nifty, Jayant Manglik, President-retail distribution, Religare Securities said: "We expect index to resume its overall uptrend in next couple of sessions and banking would lead the trend."
In the S&P BSE sectoral indices, Consumer Durables firmed up by 3.79 per cent, Bankex 1.18 per cent, Auto 0.79 per cent and Capital Goods 0.65 per cent while Realty dipped by 1.91 per cent, Metal 1.35 per cent and Power 0.99 per cent.
The total market breadth on BSE continued to be firm as 1,685 stocks closed with gains while 1,337 settled with losses. Total equity turnover improved to Rs 3,289.69 crore from Rs 3,125.21 crore yesterday.