Sensex ends flat after hitting record high

The BSE Sensex and Nifty hit a third consecutive record high on Monday but the gains fizzled out later in the session, with both indexes ending flat as automakers such as Tata Motors declined after monthly sales fell.

Earlier in the session, sentiment had been supported by a continued rally in lenders such as ICICI Bank due to expectations the Reserve Bank of India would cut interest rates as early as its next policy reviews in December or February.

The broader Nifty had risen as much as 0.34 per cent to a record high of 8,350.60, as sentiment was upbeat after US shares ended at record highs on Friday on the back of the Bank of Japan's surprise move to ramp up its stimulus programme.

Sentiment was also positive as overseas investors bought Indian shares worth $285 million on Friday, their biggest single-day buying since September 5, exchange and regulatory data showed. The benchmark BSE Sensex closed 0.02 per cent lower at 27,860.38 points after earlier rising as much as 0.37 per cent to a record high of 27,969.82 points. The broader Nifty closed 0.02 per cent higher at 8,324.15 points.

Data showing a modest pick-up in Indian factory activity, according to the HSBC Manufacturing Purchasing Managers' Index, failed to have much of an impact.

Banking stocks gained with State Bank of India closing 0.76 per cent higher on hopes of rate cuts. Traders also said the lender's decision to cut some deposit rates could improve margins. ICICI Bank closed up 1.2 per cent.

Airlines also rose. Jet Airways ended up 3.7 per cent while SpiceJet gained 6.8 per cent after state-run oil marketing companies cut jet fuel prices.

However, auto stocks declined. Mahindra and Mahindra closed 2.96 per cent lower, Maruti Suzuki India ended down 1.5 per cent and Tata Motors fell 0.83 per cent. Among other losers, Gail India closed down 5.6 per cent despite posting a 42 per cent rise in September quarter earnings as analysts say the profits were "propped up" by zero subsidy provision from the government.