After a positive opening, the BSE Sensex shot up to a high of 20,971.23 points fuelled by rise in IT stocks after Infosys posted a 21.4 per cent rise in net profit in December quarter and raised its revenue growth outlook for this fiscal.
However, the 30-share index later fell to a low of 20,625.17 as participants booked profits in banking, capital goods, realty and power shares.
The Sensex finally settled with a gain 45.12 points, or 0.22 per cent, at 20,758.49. This was the barometer's best daily gain this year. On a weekly basis, it fell by 93 points and logged the second straight drop.
December export growth eased to a six-month low of 3.49 per cent, dampening sentiments ahead of IIP, said traders.
Similarly, the 50-share NSE Nifty closed by 3.10 points, or 0.05 per cent, at 6,171.45, after climbing to 6,239.10.
Also, SX40 index of MCX-SX ended 56.51 points up at 12,423.34.
"The BSE Sensex gained strongly midway into the trading session only to end flat. Banks came in for some strong selling. However, Infosys and Wipro maintained their upmove.
Later in the day we have the industrial production data to be announced for November," said Sanjeev Zarbade, Vice President-Private Client Group Research, Kotak Securities.
Brokers said a firming trend in global stock markets as traders awaited key jobs data due out of the US, helped the domestic markets to close in the green.
IT was the flavour of the day with Infosys soaring 2.84 per cent, Wipro 2.55 per cent and TCS 1.70 per cent, helping the BSE IT index rise 2.16 per cent. It was followed by BSE TECK index that rose by 1.76 per cent, BSE FMCG index (1.43 per cent) and BSE Oil and Gas index (0.59 per cent).
* BSE index gains 0.22 pct; NSE ends 0.05 pct higher
* Manappuram Finance surges to daily limit for a second day
* Jubilant FoodWorks fall; MSCI excludes stock from indexes
* Hindalco falls after peer Alcoa disappoints on results, outlook
Indian shares gain on upbeat Infosys results; inflation next
(Reuters) Indian shares provisionally edged up on Friday after touching their highest intraday level in nearly a week as software services exporters rose after Infosys Ltd's quarterly earnings beat market expectations.
However, broader gains on Friday were capped after banking shares fell 1.5 percent on caution ahead of key inflation data next week, which are critical ahead of the Reserve Bank of India's interest rate decision on Jan. 28.
Worries on India's economy also lingered as its trade deficit widened in December, raising fears it could pose pressure on the country's fragile current account balance. November factory data is due later in the day.
Traders are also waiting for a key report on U.S. jobs later in the day.
"Easing inflation part is widely known while fiscal deficit has seen rapid acceleration. Shares may remain subdued as only IT and pharma are performing while rest of the market remains weak," said Phani Sekhar, a fund manager at Angel Broking.
The benchmark BSE index rose 0.22 percent, or 45.12 points, to 20,758.49. For the week, the index fell 0.44 percent marking its second consecutive weekly fall.
The broader NSE index rose 0.05 percent, or 3.1 points, to 6,171.45. It has lost 0.64 percent for the week.
Both indexes earlier hit their highest intraday level since Jan. 2. Infosys Ltd gained 2.9 percent after the second-largest Indian software services exporter posted a 21 percent rise in quarterly net profit, beating analysts' estimates.
Wipro Ltd gained 2.3 percent while Tata Consultancy Services Ltd rose 1.7 percent. HCL Technologies Ltd ended 1 percent higher.
ITC Ltd rose 2.2 percent on value buying after falling nearly 6 percent since October until Thursday's close compared with a 2.1 percent fall in the NSE index in the same period.
Manappuram Finance surged 20 percent, its maximum daily limit, for a second consecutive day after the central bank relaxed gold-lending rules for non-bank finance companies.
Bank of America Merrill Lynch upgraded the stock to 'buy' from 'underperform' and raised its target to 25 rupees from 13.1 rupees after the RBI move.
Shares in Muthoot Finance, another gold-based lender, rose 7.7 percent adding to Thursday's 20 percent surge.
However, among stocks that fell, Jubilant FoodWorks Ltd ended 3 percent lower after earlier marking its lowest intraday level since Nov. 5 as index provider MSCI excludes the Domino's Pizza franchisee in India from its small cap indexes.
Hindalco Industries Ltd fell 2 percent after its global peer Alcoa Inc, the largest U.S. aluminium producer, reported a massive quarterly loss on Thursday and gave a stagnant outlook on global aluminium demand.
FACTORS TO WATCH
* Euro edges higher on demand for peripheral bonds
* Brent rises on supply worries; US jobs data eyed
* Asia left adrift by mixed China data
* Foreign institutional investor flows