Foreign investors have been driving the rally in Indian shares, despite concerns in global markets over the outlook for China's economy and continued military tensions in Ukraine.
Overseas funds were net buyers of $148.6 million worth of shares in primary and secondary markets on Thursday, marking a 19th buying session in the previous 20 for a total of more than $2 billion.
Analysts attributed the strong foreign flows to hopes about easing inflation and an improving domestic economy.
Data on Friday showed wholesale price inflation eased to a nine-month low of 4.68 per cent in February, while reports earlier this week showed a sharp easing in consumer inflation and a slight uptick in industrial output.
But investors are also booking profit in some of the recent gainers, with the Sensex and the Nifty ending the week with mild losses, thus snapping a three-week winning streak.
Markets are expected to trade volatile in the near-term and global factors will mainly affect markets. Since it (markets) moved so sharply, there is limited upside left at this level. And we do have serious downside risks.brokers are recommending clients to book profits on those stocks which have moved sharply.
The Sensex rose 0.16 per cent, or 35.19 points, to end at 21,809.80 points, not far from a record high of 22,023.98 points hit on Monday. It fell 0.5 per cent for the week.
The Nifty added 0.17 per cent to 6,504.20 points, off an all-time high of 6,562.85 hit on Tuesday. The index fell 0.34 per cent for the week.
Shares were led by gainers, like Larsen & Toubro Ltd up 2.4 per cent, while Bharat Heavy Electricals Ltd rose 2.7 per cent.
Among other gainers, Infosys Ltd rose 1.1 per cent after investors gauged its 8.5 per cent fall on Thursday as overdone. Shares were hit in the previous session after chairman Narayana Murthy said revenue for the fiscal year ending March could grow at the lower end of the company's 11.5 to 12 per cent projection.
Shares in Sun Pharmaceutical Industries gained 1.59 per cent, recovering some of its 5.2 per cent fall on Thursday after the U.S. Food and Drug Administration (FDA) banned imports from one of the drug-maker's plant.
However, investors also booked profits in recent strong gainers. IndusInd Bank fell 0.2 per cent, but still ended up 11.5 per cent for the week. Kotak Mahindra Bank Ltd fell 1.1 per cent but rose 6.2 per cent for the week.Axis Bank Ltd fell 1.9 per cent after a government official said India is aiming to raise 30-40 billion rupees via the sale of a stake held by a state-run trust fund in the bank.
Shares in L&T Finance Holdings closed 6.25 per cent lower after the non-banking financial company set a floor price for its stake sale at 70 rupees per share, or an 11.5 per cent discount to Thursday's closing price.