The indices, which sank after the finance minister announced the hike in securities transaction tax, have recovered sharply and have gone past its early highs.

There is heavy buying in select sectors as large investors analyse and take note of some of the budget proposals.

The Sensex has crossed the 10400 mark and the Nifty too has touched new lifetime high.

The Sensex is trading higher by 120 points at 10402 at 02.30 PM.

The Nifty is trading higher by 15 points at 3082.

The recovery in markets is being led by FMCG, engineering, auto and cement stocks.

BHEL is the biggest gainer among index stocks with gains of close to 6 per cent. The focus on power sector with the commitment to large projects is expected to benefit the company considerably.

ITC has gained close to 5 per cent despite the hike in excise duty on cigarettes. The reduction in duties on processed foods and possible demand for paper because of the focus on rural education are expected to benefit the company.

HLL has added close to 2 per cent. Tata Steel has added close to 3 per cent.

Maruti has added close to 4.5 per cent after the excise duty cut on small cars. Tata Motors, the other beneficiary has gained close to 3.5 per cent.

ACC is the best performer among cement stocks, trading over 4 per cent higher. Grasim has gained over 3 per cent.

ICICI Bank and Reliance Industries are the other gainers.

Stocks of PSU oil marketing companies have recovered from their early lows, though they are still trading with significant losses. HPCL has lost over 3.5 per cent while BPCL has declined over 2.5 per cent. ONGC has given up over 2.5 per cent.

Nalco is trading with losses of 2 per cent.

Ranbaxy, Tata Chemicals, VSNL, HDFC and PNB are the other major losers among index stocks.