Extending gains for the fifth straight day, the Sensex on Tuesday closed higher by 86 points to over two-week high of 17,852.95 amid government saying hike in fuel prices was “unavoidable” and hopes of rate cut by RBI.

The BSE benchmark index received support from banking stocks ahead of IIP data release tomorrow; hoping weak numbers would prompt RBI to cut rates in its September 17 policy meet, brokers said.

The Sensex, which had gained 455 points in the last four trading sessions, rose over 101 points today but pared some gains to close 86.17 points, or 0.49 per cent, up at 17,852.95 - its highest level since August 21.

The 30-share index was led by gains in HDFC, NTPC, GAIL, TCS and ICICI Bank that gained in 1.2-2.5 per cent range.

Metal stocks, however, dropped under pressure with reports of slowing demand. Jindal Steel, Sterlite Industries and Tata Steel were among the biggest losers in Sensex.

The broad-based National Stock Exchange swung between gains and losses before ending higher by 26.55 points, or 0.50 per cent to 5,390.

The Cabinet Committee on Political Affairs (CCPA), which is headed by Prime Minister Manmohan Singh, was scheduled to meet this evening but it was postponed without assigning any reason or fixing a new date.

“As I said before, however painful and difficult the increase in price of oil product may be, increase is unavoidable,” Oil Minister S Jaipal Reddy said in New Delhi

Meanwhile, Asian shares ended narrow mixed ahead of a key German ruling on the euro zone’s bailout funds and the US Federal Reserve’s policy decision.

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