The Sensex and Nifty retreated from near two-year highs to end lower as investors booked profit in pharmaceutical and realty stocks such as Sun Pharmaceutical Industries and DLF Ltd.

The broader NSE index closed down 46.05 points or 0.51 per cent at 8,899.75 after rising as much as 0.52 per cent earlier in the session to 8,992.50, its highest since March 2015 and on the verge of surpassing a key psychological level of 9,000.

The benchmark BSE index ended 144.7 points or 0.5 per cent lower at 28,839.79 after gaining as much as 0.56 per cent to its highest since March 2015.

Sun Pharmaceutical shares fell 2.66 per cent, while DLF declined 8.06 per cent.

Except auto, all other BSE sectoral indices ended in the red. Among them, realty index plunged the most by 4.34 per cent, followed by power 1.91 per cent, PSU 1.59 per cent and healthcare 1.53 per cent, while auto index was up 0.28 per cent.

Top five Sensex gainers were Tata Motors (+2.66), Bajaj Auto (+2.12%), Hero MotoCorp (+1.37%), TCS (+0.85%) and HUL (+0.35%), while the major losers were Adani Ports (-3.07%), Sun Pharma (-2.63%), NTPC (-2.5%), Dr Reddy's (-1.98%) and M&M (-1.9%).

2-year high

Earlier in the day, the broader NSE index hit its highest in nearly two years and moved close to breaching a key psychological level of 9,000 on continued hopes about the domestic economy after auto manufacturers reported higher sales.

Domestic sentiment was also boosted as Asian stocks inched to a 19-month high, a day after Wall Street hit record highs as investors were encouraged by President Donald Trump's less-combative tone in his first speech to Congress.

The global rally is coming at a time of growing hopes about India's own economy.

Auto shares such as Tata Motors Ltd gained after reporting higher monthly sales, further raising hopes about the economy.

“There is a positive underlining sentiment in the Indian market,” said Tirthankar Patnaik, India strategist, Mizuho Bank.

Data on Tuesday showed annual gross domestic product (GDP) in the October-December quarter was much stronger than expected, cheering market sentiment despite widespread scepticism by economists.

Asian shares

Asian shares rose on Thursday as investors were encouraged by President Donald Trump's less combative tone in his first speech to Congress, which sent Wall Street stocks sharply higher, while growing bets on a US rate hike this month buoyed the dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 per cent, led by rebounds in Australian and Hong Kong shares.

Wall Street rally

The Dow on Wednesday blasted through the 21,000 mark for the first time after US President Donald Trump's measured tone in his first speech to Congress lifted optimism and investors viewed a looming interest rate hike as a glass half full.

The three main stock indexes surged more than 1.3 per cent to close at record highs.

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