Shares ended marginally higher on Friday, marking their highest close in nearly three months for a second day, even as investors sold financial stocks seeking more clarity on the government's decision to make foreign holdings fungible.
The BSE index ended up 0.06 per cent or 17.19 points at 28,463.31 while the NSE index closed 0.02 per cent higher or 1.80 points at 8,609.85, marking their highest close since April 16.
For the week, the BSE 30-share index gained 2.9 per cent and the broader NSE index rose 2.98 per cent.
The government said it would club together different categories of foreign investment by creating a composite foreign holding cap, a move that boosted banking stocks on Thursday on hopes of higher foreign capital inflows.
However, financial and banking shares turned negative on Friday as market watchers said more clarity was needed on the composite caps, especially in the context of sector limits.
"People were thinking FDI caps and all these caps and sub-limits are being removed in one go," said Daljeet Kohli, head of research at IndiaNivesh Securities.
"Then the fine print says that actually for the sectors there will be sub-limits which means that banks, insurance etc. will still not be beneficiary as many people were believing."
BHEL, M&M, Infosys, Vedanta, ITC and Lupin finished in the top five Sensex gainers.
However, HDFC lost ground, followed by Coal India, HUL, Axis Bank and Wipro.
Meanwhile, foreign portfolio investors (FPIs) net bought shares worth Rs 745.81 crore yesterday, provisional exchange data showed.
Overseas, Asian stocks rose today, comforted by a rise in Chinese shares. Key benchmarks in China, Hong Kong, Singapore and Japan all rose up to 1.64 per cent. However, Taiwan index and South Korea’s Kospi fell 0.06 per cent and 0.03 per cent, respectively.
Housing Development Finance Corp fell 2.4 per cent, HDFC Bank lost 0.27 per cent and Kotak Mahindra Bank declined 0.97 per cent.
Meanwhile, some support came in from large caps. Larsen & Toubro rose 0.16 per cent and Infosys was up 1.4 per cent.
Bharti Infratel Ltd's shares rose 3.8 per cent on a media report that the company is looking to acquire towers of Idea Cellular Ltd and Vodafone
Sun Pharmaceutical Industries gained 0.81 per cent as CLSA raised its target price to Rs 1,160 from Rs 1,130 and kept its "high conviction buy".