The Nikkei India Services Purchasing Managers' Index, which tracks the services sector firms on a monthly basis, stood at 50.3 in February, up from 48.7 registered in January.
In the broader market, the S&P BSE Midcap and the S&P BSE Smallcap indices added 0.6% and 1.3%, respectively to touch their fresh lifetime highs.
The Nikkei India Services Purchasing Managers' Index, which tracks services sector companies on a monthly basis, stood at 52 in September, down from August's 43-month high of 54.7, pointing to a slower and moderate rate of expansion.
Indian stock market indices have climbed close to their all-time highs, even as key overseas indices such as the Dow Jones, FTSE 100 and Nikkei 225 are reeling under the sub-prime meltdown in the US.
Bucking the overall downtrend, shares of RIL rallied nearly 10 per cent, capping the Sensex loss to a large extent.
Index heavyweights continue to be top losers with ICICI bank.
Top gainers in the Sensex pack included Yes Bank, TechM, Bajaj Finance, Bharti Airtel, Maruti, Asian Paints and Hero MotoCorp - rising up to 5.30 per cent. The 50-share Nifty ended 85.65 points, or 0.79 per cent, higher at 10,948.25 points.
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Yes Bank was the biggest gainer in the Sensex pack, rallying 11.48 per cent amid reports that private equity firms have showed interest in buying a major stake in the private sector lender.
Top losers in the Sensex pack on Friday included Bajaj Finance, ONGC, IndusInd Bank, PowerGrid, L&T, Axis Bank, NTPC, Bharti Airtel, HDFC, HDFC Bank and Kotak Mahindra Bank, falling up to 2.08 per cent.
Other than ITC, other laggards include PowerGrid, Infosys, M&M, NTPC, SBI, HDFC, Kotak Bank, HDFC Bank, TCS, Hero MotoCorp, Coal India, ONGC, RIL, Asian Paint, IndusInd Bank, ICICI Bank, Maruti Suzuki, Bajaj Auto, Tata Motors, Bharti Airtel and Axis Bank.
Manufacturing production growth eased in May, which combined with the slowdown in services resulted in a weaker increase in private sector output, the survey said.
The biggest gainers on both the bourses were Reliance Industries, Infosys, NTPC, ONGC, HUL, PowerGrid, Asian Paints, ITC and HCL Tech, rising up to 2 per cent.
The government is scheduled to release index of industrial growth for November and consumer price inflation for December later today.
Sensex was up 46 points at 20,680 and the Nifty advanced 13 points to trade at 6,140.
On the price front, Indian manufacturing companies continued to face higher input costs during August.
The Sensex has now lost 878.32 points in six sessions -- its longest string of losses in six months.
The breadth, indicating strength of the market was strong
The broader NSE Nifty, on the other hand, ended 2.70 points, or 0.02 per cent, lower at 11,555.90 in its third straight day of losses.
Asian shares dragged their feet on Tuesday.
Sluggish rise in new business inflows and a cautious approach to costs reportedly led Indian manufacturers to shed jobs in September.
It was the second straight week of gains for the benchmarks.
A reading below 50 means contraction in the sector.
The 50-issue NSE Nifty too cracked below the 10,400-mark and hit a low of 10,323.90 before finishing 99.50 points, or 0.95 per cent down at 10,358.85.
According to Japanese financial services major Nomura, India's manufacturing PMI remained in the expansion zone but suggested some consolidation after the rapid ramp up of activity in December.
The fall was led by banking stocks, with IndusInd Bank, Kotak Bank, Federal Bank, Axis Bank, ICICI Bank, HDFC Bank and SBI declining up to 2.36 per cent.
IndusInd Bank was down nearly 1% even after it reported a 21% rise in its fourth-quarter profit
This is the 14th consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
The 30-share Sensex is up 253 points at 29,263 and the 50-share Nifty has gained 68 points at 8,829.
The biggest losers of the session include Reliance, Infosys, TCS, ICICI Bank, HDFC twins, ITC, Maruti, L&T, HUL, Axis Bank, Wipro and IndusInd Bank, cracking up to 4 per cent.
BSE Metal index has spurted by almost 3% followed by counters like Banks, Realty, PSU and Oil & Gas, all gaining by 2% each.
Markets ended lower on Wednesday, amid weak European cues, as investors turned cautious and booked profits ahead of the release of Fed minutes later today and Infosys' first quarter earnings on Friday.
Among sectoral indices, telecom led the chart, spurting 3.08 per cent, followed by oil and gas.
Markets continued to trade lower in late noon deals after investors booked profits at higher levels post sharp gains in the past three trading sessions.
Indian markets too saw a deep fall as a result of the Federal Reserve's shift in policy and the Nifty and Sensex ended down more then 2.5 per cent in the negative, whereas the Europe is trading in red too.
Top losers in the session included Maruti, Tata Motors, RIL, Yes Bank, Adani Ports, Bharti Airtel, Asian Paints, ONGC, HUL, Kotak Bank, IndusInd Bank and Axis Bank, falling up to 5 per cent.
Weakness in the rupee against the US dollar also weighed on domestic stocks. The local unit fell 11 paise to 70.60 against the US dollar intra-day.
A reading above 50 means the sector is expanding, while a reading below 50 means contraction.
Yes Bank, Wipro, Kotak Bank, M&M, Sun Pharma, Maruti, HDFC, Hero MotoCorp, Infosys, TCS, L&T, Bajaj Auto and HUL were among the top gainers, rising up to 6 per cent.
Benchmark indices weighed down by software and financial shares coupled with weak global cues.
