The Sensex opened firm at 4,360.16 and moved further northward to an intra-day high of 4,382.36 but attracted profit-taking in the absence of any trigger to reach an intra-day low of 4,342.61 before closing at 4,359.22 points, a gain of 8.57 points. Nifty, however, moved in a extremely narrow range of 12 points before closing at the previous day's level of 1,384.80.

Dealers said investors have adopted a defensive strategy by buying old-economy stocks in cement, steel, public sector undertakings and refinery sectors ahead of the Union budget on expectations of infrastructural investments and PSU disinvestments.

However, new economy counters, after an overnight smart recovery, reacted downwards on profit-taking in the absence of any follow-up support. A lack of direction from the Nasdaq, which was closed on Monday for the President's Day holiday, also partly affected sentiment, they added. Fast-Moving Consumer goods (FMCG) giant and index heavyweight HLL was also in the limelight on renewed buying by institutional investors which partly aided the Sensex rise. Foreign institutional investors continued the shopping spree by picking up select old economy shares while local institutions and funds were booking profits in high-priced cyclicals. Power and fertiliser shares were also in keen demand on expectations of some concessions in the upcoming budget.

The L&T stock settled with a gain of 5.90 per cent at Rs 292 on the market buzz that its cement division will be valued at $104 a tonne. This counter clocked a turnover of 94 lakh shares on the BSE. Tractor and utility major M&M remained firm by rising 3.77 per cent at Rs 184.50 ahead of the IPO of Mahindra British Telecom, in which the parent holds a substantial equity stake. FMCG major Colgate, HLL and Nestle were up on valued fishing by FIIs at lower levels. Colgate was up by 4.78 per cent at Rs 188.50, HLL up 0.81 per cent at Rs 217.90 and Nestle up 0.74 per cent at Rs 534.

Among PSU stocks, refining major HPCL was firm by gaining 4.34 per cent at Rs 198.25 on hopes that more decisions on disinvestment will be announced in the budget. BHEL and MTNL continued attracting buying support.

The Tata group has increased their stake in Tata Steel to more than 26 per cent and company's plans to increase steel prices and its decision to retire high-cost debt also continued to attract good amount of buying interest and the stock closed 1.38 per cent up at Rs 157.50. However, profit-taking in new economy stocks limited gains in Sensex. Huge fund-selling in NIIT brought down the stock by 2.51 per cent to a recent low of Rs 1,372, Infosys Technologies lost 0.48 per cent at Rs 6,274.90 and Satyam Computers lost by 0.48 per cent at Rs 370.30.