Mumbai: India’s benchmark Sensex neared a record closing high on Wednesday, even as firm oil prices and a weak rupee kept the market outlook hazy.

Upcoming state elections and next year’s general election also kept investors wary of taking big decisions. Ongoing June quarter earnings announcements may drive the market in the near-term.

In a choppy session, the 30-share BSE Sensex closed 0.07% or 26.31 points higher at 36,265.93 points. At this level, it is only 17.32 points short of its earlier closing record of 36,283.25 set on 29 January.

The BSE Auto Index fell to a six-month low of 24,838.52 points as the ministry of finance proposed to increase taxes on vehicles powered by internal combustion engine. Tata Motors was the worst affected as the stock fell by 2.7%, while the stocks of Maruti Suzuki and TVS were down by 1.4% and 1.19%, respectively.

National Stock Exchange’s (NSE’s) 50-share Nifty closed almost unchanged at 10,948.30 points. For Nifty, the record closing level is 182.10 points away. Nifty had logged a record close of 11,130.40 on 29 January.

“Globally, we need to see where dollar settles and development of trade wars are key as well, for direction," said Vaibhav Sanghavi, co-chief executive of Avendus Capital Public Markets Alternative Strategies Llp.

“On the domestic front, markets will closely focus on earnings season. The first half of earnings season is usually positive. The market will chase how the earnings growth story pans out," said Sanghavi. “That said, I don’t expect a market re-rating to happen."

Top software exporter Tata Consultancy Services (TCS) Ltd rallied as much as 6.29% to a record high of 1,995 after it reported better-than-expected June quarter results. The stock closed 5.47% higher at 1,979.60, and contributed the most to Sensex’s gain.

The rally was not broad-based and select heavyweight stocks drove the recent leg of the rally, market participants said.

“Sensex may be close to record high but the broader market is far away from record close. The rally has been very narrow, and showing relative strength compared to the markets. The flow of money in exchange-traded funds (ETFs) could be driving the market higher," said Rikesh Parikh, vice-president, institution corporate broking, Motilal Oswal Securities Ltd.

“However, it’s not time to celebrate. Domestic flows are continuing. But then, the global situation is not very conducive. We are not seeing a broad-based rally," added Parikh.

Foreign institutional investors or FIIs have been net sellers of Indian shares since April, erasing the strong inflows seen in the first quarter. For the calendar year so far, they are net sellers of around $880 million. Domestic institutional investors or DIIs on the other hand, have been net buyers in all the months of 2018, infusing a net of 66,092.6 crore into equities.

“The only hope is that earnings growth should return and that should help the market. In the near-term, the results season will be guiding the market," said Parikh.

Only five sectoral indices closed higher on Wednesday, with BSE IT index leading the gains, as it rose 2.38%. Only 10 of 30 Sensex stocks closed higher.

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