Stock markets turned edgy today with the benchmark Sensex closing with a marginal 1.34-point

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drop after a volatile session, as an impressive industrial growth coupled with high inflation rate fuelled fear of imminent hike in lending rates.

The Bombay Stock Exchange's 30-share index settled at the 7-week high level of 17,166.62 points, down 0.01 per cent or 1.34 points.

Despite the decline, the market managed to scale its highest level since January 20 as stocks rallied in early trade on expectations of good industrial production figures.

In the intra-day trade, it rose to as high as 17,244.54 a new 52-week peak, but pared some of the gains on profit booking in blue-chips like HDFC Bank, Infosys, HUL and L&T.

The National Stock Exchange's 50-share Nifty index closed 0.07 per cent or four points higher at 5,137 points.

"The good IIP figure failed to boost market sentiment and pulled it down from intra-day high level. There is very low volume which is not supporting the gains at higher end," Unicon Financial Intermediaries CEO G Nagpal said.

This is the third straight week of gain posted by the key index. The market traded in a narrow range but managed to move 172.13 points up this week.

India's factory production grew 16.7 per cent in January on robust manufacturing activity, lending optimism of a faster economic recovery, which analysts said would prompt the central bank to adopt monetary tightening.

Markets @ 09.39 AM

Indian stocks were trading 0.3% higher on Friday, helped by gains in Asian and US stocks, with automakers racing ahead.

India’s top vehicle maker Tata Motors was up 0.8% while top car maker Maruti Suzuki and top utility vehicle maker Mahindra & Mahindra rose 1.1% and 1.9% respectively.

“Auto stocks may continue to rise, as sales are buoyant. Also the (federal) budget left more money power in the hands of consumers, which will push up volumes,” said K.K. Mital, head of portfolio management services at Globe Capital in New Delhi.

By 9:39am, the 30-share BSE index was trading up 0.3% at 17,220.13 points, with 21 of its components gaining. The 50-share NSE index was up 0.4% at 5,151.40 points.

Foreign funds have been net buyers in Indian equities for eight sessions to 10 March, pouring in more than $2 billion, a part of which has been absorbed by primary market offerings.

“Market has been consolidating for a while. But, any steep downside is not likely from here, as there are no negative triggers in the offing,” Mital said.

Investors awaited the January industrial output data, which is due by 12:00pm for further cues.

Industrial output is forecast to have risen 16.65% in January from a year earlier, a Reuters poll showed.

Tata Steel, the world’s eighth-largest steel maker by output, rose 0.3% to Rs610.

Its vice-chairman B. Muthuraman said stronger demand in the current quarter would drive its expected 20-percent increase in Indian steel sales volumes and 7-8% growth in European sales volumes.

Oil and Natural Gas Corp climbed 0.3% to Rs1,087.70 after Russia said it is considering inviting the Indian state-run firm to develop oil and gas fields in Russia.

In the broader market, gainers aced decliners in a ratio of 1.9:1 in a volume of 56 million shares.

Markets @ 09.00 AM

The Bombay Stock Exchange benchmark Sensex gained 77 points in the opening trade today on continued capital inflows by foreign funds, taking cues from global markets.

Expectations of positive Industrial output data for the month of January also supported the upside in stock prices.

The 30-share index, which gained over 115 points in the past two sessions, rose by 76.58 points, or 0.44 per cent to 17,244.54 points in opening trade with all the sectoral indices trading in positive zone with gains of up to 0.53 per cent.

The wide-based National Stock Exchange index Nifty also went up by 24.70 points, or 0.48 per cent to 5,158.10 points.

Stock brokers said that apart from firming trend on the global markets, expectations of strong industrial output data for the month of January also buoyed the trading sentiments, triggering buying by foreign funds.

Major gainers which supported the Sensex were Mahindra and Mahindra (2.13 per cent to Rs 1,148), Maruti Suzuki (1.22 per cent to Rs 1,484.10), Sterlite Industries (0.71 per cent to Rs 826.50), Tata Steel (0.42 per cent to Rs 610.90) and State Bank of India (0.50 per cent to Rs 2,055.55).

The US Dow Jones Industrial Aveage ended 0.42 per cent higher in the previous session, while Hong Kong's Hang Seng index gained 0.13 per cent and Japan's Nikkei up by 0.41 per cent in the morning trade today