The 30-share index had risen by 158 points to a high of 22,602.71 in early trade as FIIs continued to invest in Indian equity markets.
However, profit booking in some counters trimmed some of the gains and the barometer closed up by 63.30 points, or 0.28 per cent, at 22,508.42 points, a closing level not seen after April 28. The index gained 41.23 points in the last session.
The National Stock Exchange's index Nifty advanced by 15.95 points, or 0.24 per cent, to 6,715.30, after shuttling between 6,743.45 and 6,701.90 in day trade.
Brokers said foreign institutional investors (FIIs) continued to show optimism in the Indian stock market and pumped in more funds, boosting sentiment here.
FIIs bought shares worth a net Rs 279.86 crore yesterday as per provisional data from the stock exchanges.
They said encouraging fourth quarterly earnings by some more companies also triggered buying activity.
Among Sensex stocks, Reliance Industries was the biggest gainer rising by 1.91 per cent, while Oil & Natural Gas Corp (ONGC) ended 0.45 per cent. ICICI Bank jumped 1.63 per cent, FMCG major ITC surged 1.06 per cent, Larsen and Toubro by 1.24 per cent and Mahindra and Mahindra by 0.55 per cent.
Tata Motors rose by 0.98 per cent, Tata Steel by 0.89 per cent and Maruti Suzuki by 0.61 per cent.
On the other hand, Hero Motocorp, Bajaj Auto, Infosys, TCS, Wipro, Tata Power, Hindalco and Bharti Airtel were among the major losers with losses of up to 2.10 per cent.
In 30-BSE index components, 14 stocks gained, 15 ended lower while NTPC remained steady at Rs 114.
The consumer durables index gained the most by rising 3.22 per cent to 6,793.61 followed by oil and gas by 1.10 per cent to 9,804.20. Capital goods sector index by 0.99 per cent to 12,129.67, Banking index by 0.54 per cent to 14,829.50 and FMCG index by 0.46 per cent 6,821.68.
BSE Sensex hits 1-wk closing high; Reliance Industries rises
(Reuters) BSE Sensex rose for a second consecutive session on Tuesday to its highest close in a week as blue-chips such as Reliance Industries gained after foreign investors snapped a five-day selling streak in index futures. Overseas investors bought index futures worth 860 million rupees ($14.29 million) on Monday, snapping five days of sales totalling 2.43 billion rupees that had raised fears of reduced foreign buying in future.
Gains also tracked higher Asian rivals after an indicator of the services sector rose at its fastest pace in eight months, easily topping forecasts and raising hopes about the U.S. economy.
In India, however, the HSBC Services Purchasing Managers' Index compiled by Markit, rose to 48.5 in April from 47.5 in March, but held stubbornly below the 50-mark that divides growth from contraction.
Still, analysts cautioned against broad gains ahead of election results on May 16, with shares coming off the record highs hit late last month.
"Market is moving from irrational exuberance to careful selection of portfolio. Expect some more paring of positions," said Deven Choksey, managing director at K R Choksey Securities.
The benchmark BSE index rose 0.28 percent, or 63.30 points, to end at 22,508.42, while the broader NSE Nifty index rose 0.24 percent, or 15.95 points, to end at 6,715.30. Both indexes marked their highest close since April 28.
Reliance Industries rose 1.7 percent while ICICI Bank ended 1.9 percent higher. Among other blue-chips, ITC rose 0.9 percent while Larsen & Toubro gained 1.3 percent.
NTPC rose 0.4 percent after India's Supreme Court told the country's top power producer that it can cut supplies to an electricity distributor in New Delhi if it is not paid arrears by end-May, intensifying a dispute that could lead to blackouts in the capital.
Piramal Enterprises Ltd surged 3.1 percent after the contractor for drug research and manufacturing services on Monday announced a dividend of 52.50 rupees per share when reporting January-March results.
Credit Analysis and Research Ltd rose 1.3 percent after the Reserve Bank of India allowed foreign institutional investors to buy up to 74 percent of the ratings provider. Titan Company Ltd gained 3.5 percent after its Jan-March profit rose 11.3 percent to 2.06 billion rupees, beating some analyst estimates.
However, among decliners, Canara Bank Ltd slumped 5.5 percent after dealers said the bank's January-March net profit was boosted by a tax refund they estimated at 1 billion rupees ($16.62 million).
* BSE index gains 0.28 pct; NSE ends 0.24 pct higher
* FIIs snap 5-day selling streak in index futures
* Indian services downturn eases in April
* Canara Bank slumps; earnings concerns surface
FACTORS TO WATCH
* Dollar slides broadly, bullish data helps euro
* Brent rises on Ukraine clashes, Libya uncertainty
* Dollar wilts to 6-1/2 month low, shares gain
* Foreign institutional investor flows