Markets edged higher in the afternoon session and ended the day on a positive note after engineering conglomerate Larsen & Tourbo reported 17 per cent rise in the fourth quarter profit.
Nifty opened marginally higher and continued to trade lacklustre as investors turned to the sidelines ahead of the L&T results.
The index touched a high of 5,453 in the afternoon session after L&T reported net profit of Rs 1,686 crore (Rs 16.86 billion) against Rs 1,438 crore (Rs 14.38 billion) same time last year, higher than estimated Rs 1,550 crore (Rs 15.5 billion) by various brokerages.
Quarterly profit was boosted by pick up in project execution and one time gain from stake sale.
The S&P CNX Nifty ended at 5,422, up 8 points, and the Sensex closed at 18,141, up 55 points.
L&T rallied 6% and closed near day's high Rs 1609 and contributed 61 points to the benchmark index Sensex. L&T Chairman AM Naik said that order inflow will grow between 15 to 20% in FY12.
However, the operating margin environment would remain challenging. Deepak Singh Tanwar from Sound and Equity Consulting said that after the rally, 1500 level will act as a good support for the stock and 1625-1650 will act as a strong resistance.
Most of the analysts have turned bearish on the Indian markets in the near term and expect 8-10% correction as large numbers of stocks are witnessing selling pressure on earnings downgrades concern.
Technical analysts recommend the investors to watch out for 5400 level on the Nifty.
Ashish Chaturmohta Vice President (Derivatives & Technical Analyst) from IIFL Wealth said, "5400 is the key support to watch, a close below this level may lead to unwinding of long positions and fresh writing can drag index towards 5200
"On the upside, positive momentum may only be seen if Nifty sustains above 5550 levels with volume support."
Other markets across Asia ended mixed.
The Nikkei average slipped 0.4% after the gross domestic product of Japan contracted by 0.9% for the January to March quarter.
Hong Kong's Hang Seng Index was up 0.8% helped by property developers and energy counters, while the Shanghai market was little changed, down 0.1% as low volumes pointed to investor caution.
Back in India, BSE Capital Goods index was leading the gains after L&T reported upbeat results despite the deferment of some infrastructure and power orders.
The BSE Capital Goods Index was up 2.8%, besides L&T, Siemens surged 1% and Crompton Greaves advanced 0.7%.
Realty shares were leading the losses, down 2.9%. Analysts said that high interest rates and slowdown in demand will weigh on the sector.
Unitech lost 4.2%, Orbit Corporation was down 3.6% and HDIL plummeted 3.6%.
Top gainers on the Sensex were Larsen & Tourbo, up 5.9%, Reliance Industries, up 1.5% and ONGC rallied 1.2% on bargain buying after the battering seen in the past few sessions over subsidy concerns. Prominent losers were Reliance Communication, down 3.4%, DLF dipped 3.3% and Hindalco Industries was off 3.1%.
From the broader markets, the midcap and the smallcap indices were trading marginally higher, up 0.7 and 0.5% each.
Market breadth was positive, 1072 stocks advanced for 1683 stocks which declined.
