Mumbai: The market extended gains for the second straight day and the Sensex ended 12 points up as operators covered short positions amidst apprehensions over apex bank's lower growth projections and higher inflation for this fiscal.

However, late sell-off by domestic mutual funds and some retailers trimmed early gains in second half of the session.

The BSE Benchmark 30-share Index opened on a promising note at 5656.71 and later fluctuated in a range of 5699.18 and 5623.04 before ending at 5662.87 as against yesterday's (Oct 26, 2004) close of 5651.09, a net gain of 11.78 points or 0.21 per cent.

Operators preferred to square up positions ahead of the expiry of October contract in derivatives on Thursday (Oct 28, 2004).

Expecting a hike in interest rates in the near future due to Reserve Bank of India's decision to raise the repo rate by 25 basis points, brokers said the downward revision of economic growth and increase in inflation estimates will have adverse impact on the market.

Operators are believed to have squared up positions in blue chip counters including Satyam Computers, Tata Steel, Tata Motors, ICICI Bank, Maruti Udyog, HDFC Bank, Dr Reddy's, GACL, HDFC and a few others.

Local mutual funds and retailers seemed to be booking profits in some key stocks.

Heavyweighted counters including RIL, SBI, ONGC, HPCL, HLL, BHEL and ITC recorded marked falls on selling pressure.

Meanwhile, Foreign Institutional Investors reported net purchases of Rs 77.90 crore on Monday (Oct 24, 2004).