is it possible to add a start and end tag to the output using XSLT?
note that I want to add the two tags (start and end) at two different pieces of XSL(say using two different templates). So I am not adding this element at one place but need to just put tags in output that would later resolve to a structurally correct xml. Can I do this?

No, for two reasons, firstly the XSLT has to be XML, so nested elements etc. Secondly XSLT has no concept of tags, it deals in nodes and you can't output half a node.
You need to rethink the design somewhat, from a procedural to functional and declarative, if you have a specific example post the XML and XSLT.

--

Joe (Microsoft MVP - XML)

The output of a transformation is a tree containing nodes. Don't even think about tags, leave that to the serializer.

Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference

In xml I would get elements such as
<fieldgroup class="start" id="x"/>
<field type="text" size... value=.../>
...other fields..
<fieldgroup class="end"/>

Basically the xml tells me a group of fields wrapped by a pair of fieldgroup elements. so each field would be placed individually inside <tr><td> which I can do while looping and when come across each field.
When I see fieldgroup with class="start" I need to just place <tbody> tag with the id from xml. And when seen fieldgroup with class="end" I need to put closing tag </tbody>. Note that the xml could even have <fieldgroupstart> and <fieldgroupend> alternatively but it's still the same effect. The issue is that getting the proper xml such as <fieldgroup>
 <field>....</field>
 ....
</fieldgroup> right now is very complicated. So this is a workaround for short time till we revamp the xml getter piece. I was trying to see if I can get the xsl to do what I want: which is while in a loop, see xml elements and place start and end tags of tbody; in case of fields place entire content element e.g. <tr><td><input.../></td></tr>. The problem comes because I see fieldgroup start and end in two different iterations of a loop and so I don't get a chance to place <tbody> element but have to place start and end tag. Has anyone done something like this before? and can I even possibly do it?
Thanks for responses!

This kind of problem is known as positional grouping and it can be quite tricky, especially in XSLT 1.0 - it's usually much easier in 2.0. Google for "positional grouping XSLT" for some background. Your thinking, of working at the level of tags, is understandable, and you can implement solutions that way in other languages, but it's not the XSLT way.

The first point about such problems is to design your stylesheet around the output structure, not the input structure. Your remarks such as "which I can do while looping and when come across each field" suggest that your code is following the input structure. You say it yourself: "The problem comes because I see fieldgroup start and end in two different iterations of a loop". You need to invert the structure.

Draw the structure of your result tree. Write templates to generate each element in the result tree. Then fill in the templates by asking "what information do I need to fetch from the source document to fill in the content of this element?"

Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference