BSE Sensex edgedup on Thursday, marking a third consecutive session of gains that pushed indexes to their highest close in two years, as expectations for better-than-expected quarterly earnings lifted technology stocks such as Infosys.
Shares have started 2013 on a strong note as investors bet the Reserve Bank of India (RBI) will cut interest rates later this month, and as the resolution to the so-called U.S. "fiscal cliff" negotiations have benefitted global markets.
Foreign investors have also bought a net 19.25 billion rupees in equities this year, according to provisional exchange and regulatory data, after buying a net $24.37 billion last year.
However, analysts say 2013 would be a lot different from 2012, which saw a 25.7 percent gain in the benchmark index, as budget problems in the U.S. are far from over, while at home the fiscal defict poses a challenge for a meaningful reduction in interest rates.
"Market is in a wait-and-watch mode because U.S. problems are just postponed and not solved as discussion regarding debt limit will come back," said Jagannadham Thunuguntla, head of Research at SMC Investmensts and Advisors.
Earnings growth in 2013 will largely depend on the central bank's stance on rates and government policy measures, he added.
The benchmark BSE index rose 0.26 percent, or 50.54 points, to end at 19,764.78, marking its highest close since January 6, 2011.
The broader NSE index rose 0.27 percent, or 16.25 points, to end at 6,009.50, its highest close since January 6, 2011, and ending above the psychologically key level of 6,000 points.
Indian companies are due to start reporting earnings next week, with Infosys Ltd
Hopes that software service exporters would report solid earnings were amplified by expectations an agreement on the U.S. fiscal cliff would improve demand from the key U.S. market.
Jet later confirmed it was in talks with Etihad, in the first confirmation of a potential deal by either side.
India's Dr. Reddy's Laboratories Ltd
Shares in gold loan providers rallied after a central bank report proposed increasing the loan-to-value, or LTV, ratio to 75 percent from 60 percent currently.
However, shares in Titan Industries
Shares in India's biggest domestic iron ore producer, state-run NMDC Ltd,