After closing in on 18,000-level, the Sensex on Thursday surrendered most of its 126-point gain to end the day flat as investors developed cold feet due to political deadlock over CAG reports.

After opening higher on firm global cues, the Bombay Stock Exchange benchmark index climbed to 17,972.54 on the back of buying activity in IT stocks, banks and FMCG stocks.

The Sensex, however, started losing momentum amid the standoff between Opposition and the government over the CAG report on coal block allocation continuing into the third day.

he index closed at 17,850.22, up 3.36 points over Wednesday.

Hectic selling in Reliance, the biggest loser among 30-share Sensex, and L&T, ONGC, M&M, HDFC dragged down the index. The Sensex could have slipped into negative zone if it was for smart gains notched up by Wipro, Infosys, TCS and ITC.

Brokers said investors and funds indulged in profit-booking at the second half of the session amid worries that economic reforms could be stalled with the BJP-led NDA sticking to its demand for Prime Minister Manmohan Singh’s resignation on the coal block allocation issue.

Fund flows into stock market were disrupted after normal operations in public sector banks, including cheque clearances and fund transfers, were on Thursday hampered for the second day because of the strike called by unions to protest against reforms in the sector and outsourcing of non-core services.

Traders said the falling market was partly supported on account of a firming trend in the global market on expectations of more stimulus from the US and China.

The 50-share National Stock Exchange index Nifty ended higher by 2.50 points to 5,415.35, after touching the day’s high of 5,448.60.

More In: Markets | Business