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Sensex cuts gains to end below 26,000; Nifty holds 7,850

Analysts warned the rally could be short-lived, with volatility expected next week ahead of the derivatives contracts expiry on November 26.

Market breadth remained positive with 19 of the 30 Sensex components ending the day in green. Photo: Reuters Market breadth remained positive with 19 of the 30 Sensex components ending the day in green. Photo: Reuters

The domestic markets cut most of its intraday gains to end marginally higher on Friday but recorded their first weekly gain in four.

Sentiment in the Street turned negative after global rating agency Standard & Poor's said chances of rating upgrade for India is low for over 12-18 months on sustained high fiscal deficit.

The S&P BSE Sensex ended the day at 25,868.49, up 26.57 points. The index had reclaimed its key psychological level of 26,000 in the afternoon trade.

The broader CNX Nifty settled at 7,856.55, up 13.80 points. The 50-share index had topped its crucial 7,900-mark earlier in the day.

Market breadth remained positive with 19 of the 30 Sensex components ending the day in green.

Analysts warned the rally could be short-lived, with volatility expected next week ahead of the derivatives contracts expiry on November 26.

"Volatility has become the hallmark of this market. We haven't seen real strength in the market even though such rallies do come, it's mostly an opportunity to sell into the rallies," told Jayant Manglik, president of retail distribution at Religare Securities to Reuters.

Gas stocks caught attention with BSE oil & gas index being the best sectoral gainer, which added 2.05 per cent in trade today. Shares of GAIL, Petronet LNG, Gujarat Gas, Indraprastha Gas and Gujarat State Petronet rallied up to 17 per cent following news reports Ras Gas Company (RasGas) is ready to modify sales and purchase agreement (SPA) with Petronet.

Meanwhile, Fitch Ratings said a proposed 23.6 per cent hike in salaries and pensions for about 10 million current and former government employees in India could hurt the country's finances and underscore the weakness in its sovereign credit profile.

Among Asian markets, China's Shanghai Composite ended with an uptick of 0.37 per cent, Hong Kong's Hang Seng added 1.13 per cent, while Japan's Nikkei settled 0.10 per cent higher.

Overnight, US markets ended flat as traders took a breather on the heels of the volatility seen over the past few sessions. The Dow Jones industrial average closed 0.02 per cent weaker, while the S&P 500 lost 0.11 per cent. The Nasdaq Composite edged 0.03 per cent lower.