In volatile trade, the 30-share index opened strong and rose to the day's high of 24,587.16 but thereafter slipped into negative zone as investors encashed gains.
It hit a low of 24,299.53 before making a recovery to settle at 24,376.88 -- up 13.83 points, or 0.06 per cent. It surpassed previous closing peak of 24,363.05 made yesterday. Sensex has now gained 562 points in four sessions on sustained optimism over incoming Narendra Modi-led government.
While there was renewed buying in recent under-performers like IT and drugmaker sectors, oil&gas shares saw heavy selling. RIL and ONGC slumped 3.7-4 per cent. Coal India after a strong show yesterday fell 5.9 per cent today.
Auto shares including Hero Moto, Tata Motors, Maruti Suzuki and Bajaj Auto saw profit-taking, traders said.
The 50-share NSE index Nifty rose by 11.95 points, or 0.16 per cent, to yet another record closing high of 7,275.50, after scaling intra-day peak of 7,350.65.
Foreign institutional investors (FIIs) continued their buying spree by investing a net Rs 1,350.04 crore yesterday, according to provisional data from the stock exchanges.
"Profit-booking in recent gainers and cautious approach adopted by participants at current record levels, slowed down the rising pace to some extent", said Deepak Pahwa, a Delhi-based stock broker.
A firming trend in the Asian region also strengthened the market sentiment, brokers said.
Interest-sensitive realty sector was the star performer by rising the most by 4.89 per cent, consumer durables index rose by 2.37 per cent and metal index by 1.61 per cent.
IT index recovered by 2.11 per cent on the back of rebound in IT bellwether Infosys which rallied 3.19 per cent , Tata Consultancy by 1.39 per cent and Wipro by 2.61 per cent.
In pharma, Dr Reddy Lab rose by 1.13 per cent and Cipla gained 1.13 per cent, pushing the BSE healthcare index by 1.48 per cent.
Indian shares pause after dream run, but still at record closing high
(Reuters) Indian shares edged up on Tuesday to their latest record closing high, managing a fourth consecutive session of gains as domestic-oriented stocks such as Sesa Sterlite continued to rise on hopes tied to the incoming government led by Narendra Modi.
Modi is expected to be sworn in by early next week amid high hopes from markets that his Bharatiya Janata Party will usher in a period of major reforms that would kickstart an economy growing at its slowest in a decade.
In a sign that the rally may be sustainable, midcaps such as property developer Unitech Ltd are also surging, joining the strong gains by domestic-focused companies.
Meanwhile, on Tuesday IT outsourcers such as Infosys Ltd , which had tumbled badly because of a stronger rupee, also recovered.
Still, some analysts urge some caution, given the prospect that the government may fail to meet the high expectations, with broader gains capped on Tuesday as investors also boked profits in recent outperformers such as Coal India Ltd.
"Markets have run up too fast too soon. The biggest challenge for the incoming government would be food inflation and expectations management," said Nobutaka Kitajima, chief investment officer at of equities at LIC Nomura Mutual Fund.
The benchmark BSE rose 0.06 percent, or 13.83 points, to a record closing high of 24,376.88, although the index remains below the all-time high hit on Friday.
The BSE is now on the verge of moving past Pakistan's Karachi Stock Exchange as Asia's best performing exchange in dollar terms for the year, after gaining 22 percent so far in 2014.
The broader NSE index rose 0.16 percent, or 11.95 points, to end at a record closing high of 7,275.50.
Overseas investors have been a big reason for the gains this year, having bought a net of around $14.3 billion in shares since Modi was declared the BJP's prime ministerial candidate on Sept. 13.
Domestically-led shares continued to lead gains. Sesa Sterlite Ltd surged 7.9 percent while Housing Development Finance Corporation rose 2.6 percent.
The rally is now also covering smaller companies, sending the NSE midcap index to its second consecutive record high on Tuesday.
Among the top performers were Unitech, with a 14.6 percent gain, while Union Bank of India rose 2.4 percent and private insurer Max India surged 6.8 percent.
IT exporters also rebounded after taking a beating in the previous two sessions.
Infosys rose 3.5 percent after falling 7.9 percent in the last two sessions, while Tata Consultancy Services gained 1.6 percent.
Defensive stocks also gained after taking a pounding recently. ITC rose 0.8 percent after falling 8.2 percent over the last two sessions.
However, broad gains were limited by profit-taking in recent outperformers. Coal India shares, which rose 12.6 percent on Monday, are down 5.8 percent, while Oil and Natural Gas Corp Ltd fell 4 percent after gaining 8.5 percent on Monday.