The post-Budget climb went on for the third day as the Sensex stayed in the green at 28,241 with a minuscule gain after a monthly survey suggested that Reserve Bank has much headroom to stay accommodative in its policy meet next week.
With help from banking and healthcare stocks, the 30-share Sensex settled at 28,240.52, up 13.91 points, or 0.05 per cent, after moving sideways for much of the session.
The previous two sessions have seen a rally of 570.65 points after the Union Budget was greeted positively by market participants.
The 50-share NSE Nifty closed at 8,740.95, up 6.70 points, or 0.08 per cent.
On a weekly basis, the Sensex rallied 358.06 points, or 1.28 per cent, and the Nifty 99.70 points, or 1.15 per cent.
The investors are now looking forward to the RBI policy meeting on February 8 and release of US payroll data.
"Market ended flat after a range-bound movement while holding the weekly gains. RBI's monetary policy next week is in the limelight with the expectation of a rate cut, given the government's prudence on fiscal deficit," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
The rupee ended firm at 67.31 as its good run against the dollar continued for the eighth day.
The services sector contracted for the third consecutive month in January as the Nikkei India PMI survey suggested that input cost inflation slowed since December which may prompt the Reserve Bank to go in for an "accommodative" monetary policy.
Asian markets were mixed at the close and European shares traded higher at the start.
Shares of banks such as SBI, Axis Bank and HDFC Bank were at the centre of brisk buying activity, which rose by up to 1.72 per cent.
Cipla, Coal India, Dr Reddy's, TCS, Sun Pharma, HUL, GAIL and Lupin advanced by up to 4.18 per cent.
Sun TV Network soared 23.92 per cent after a special court yesterday acquitted former telecom minister Dayanidhi Maran, his brother and promoter Kalanithi Maran and others in the Aircel-Maxis deal case. Glenmark Pharma jumped 4.21 per cent after an over two-fold jump in consolidated net profit for the December quarter.
In the meantime, shares of BSE made a stellar debut at the National Stock Exchange (NSE) today by surging 32.65 per cent to Rs 1,069.20 against the issue price of Rs 806.
The healthcare scaled the most (1.61 per cent), followed by PSU, realty, capital goods, IT and bank.
The broader markets too continued to trend firm as retail investors boosted their bets, with the BSE small-cap index rising 1.08 per cent and mid-cap 0.61 per cent.
Japan's Nikkei ended higher while Hong Kong and Shanghai finished in the negative zone. Europe ruled high in early deals.
Foreign investors bought shares worth a net Rs 108.59 crore while domestic ones net bought shares worth Rs 1,133.74 crore yesterday, as per provisional data.
Of the 30-share Sensex pack, 17 ended higher and the rest
lower.
The overall market breadth remained positive after 1,655 climbed, 1,163 fell while 156 ruled steady. The total turnover on BSE slumped to Rs 3,523.71 crore, from Rs 3,836.14 crore previously.
"Investors are awaiting the US job data to get some sense on future Fed policies," added Nair.
