BSE Sensex hits record high above 28,000

By Indulal PM

MUMBAI (Reuters) - The BSE Sensex and Nifty edged higher on Wednesday after earlier hitting a fourth consecutive record high that sent the benchmark BSE index above the 28,000-point mark for the first time, as lenders continued to rally on hopes of early interest rate cuts.

Continued fund flow from overseas investors also lifted sentiment. Foreign investors bought shares worth $900.2 million in the last four consecutive sessions, taking their rally for so far this year to $14.2 billion.

However, gains were capped as metals and mining companies fell sharply tracking weaker global prices, while investors also booked profits as markets across the region were subdued.

Caution also prevailed ahead of a market holiday on Thursday.

"Overall outlook is positive. The investment climate has improved and is expected to be good. And we do expect RBI to cut rates," said Deven Choksey, managing director at KR Choksey Securities.

The Sensex closed 0.2 percent higher at 27,915.88 points. Earlier, it rose as much as 0.54 percent to break 28,000 levels and made a fresh record high of 28,010.39, breaching the 27,969.82 level hit in the previous session.

The broader Nifty gained 0.2 percent to 8,338.30 points. The index gained as much as 0.5 percent to hit a record high of 8,365.55 points.

Markets were closed on Tuesday for a public holiday.

Banks continued their rally on growing expectations the Reserve Bank of India would cut interest rates as early as its next policy review in December, or, if not, in February.

State Bank of India gained 2.2 percent, adding to its 0.8 percent gain on Monday and 4.8 percent in the last week. ICICI Bank closed up 1.6 percent while Axis Bank gained 2.9 percent.

The NSE bank index closed 1.3 percent higher.

Dr Reddy's Laboratories closed 2.2 percent higher after Morgan Stanley upgraded the stock to "overweight" from "equal-weight", citing improved outlook.

State-run oil marketing companies also gained with Bharat Petroleum Corp Ltd up 2.2 percent as international crude prices fell to a four-year low, which according to traders would help improve margins.

Indian Oil Corp closed 1.23 percent higher, while Hindustan Petroleum Corp Ltd ended up 2.02 percent.

However, metals and mining companies fell with Sesa Sterlite plunging 4.4 percent as iron ore prices hit a multi-year low. NMDC Ltd closed down 3.9 percent.

Ipca Laboratories plunged 10.4 percent after Credit Suisse downgraded it to "underperform" from "neutral", citing negative USFDA observations.

(Reporting by Indulal PM; Editing by Sunil Nair)