Sensex hits record high, posts longest monthly streak since 2006

MUMBAI (Reuters) - The BSE Sensex rose to a record high on Thursday as continued buying from foreign investors lifted blue-chips such as Oil and Natural Gas Corp, allowing the benchmark index to post its seventh consecutive monthly gain in the best streak since 2006.

Foreign investors, who have been key drivers of the market rally this year, bought Indian shares worth $48 million on Wednesday, marking a ninth consecutive session of purchases and bringing their total net inflows for the year to $12.95 billion.

Despite some flare-ups in geopolitical tensions, sentiment in India remains supported by optimism about an improving economy and expectations Prime Minister Narendra Modi will usher a period of significant fiscal and economic reforms.

A key sign of that could come on Friday when India is due to post economic growth data for the April-June quarter, as well as the current account deficit report sometime over the next week.

"Markets consolidated at higher levels during the week. Going ahead, expectations on interest rate movements in the U.S. and fiscal reforms in India will continue to drive the markets in the medium-to-long term," said Dipen Shah, head of private client group research at Kotak Securities.

"In the short term, geo-political issues and monsoons will be the triggers to track," Shah added.

The BSE Sensex rose 0.29 percent to 26,638.11 on Thursday. It earlier hit a record high of 26,674.38, surpassing the previous all-time high hit on Monday.

For the month, the Sensex rose 2.9 percent, marking its longest streak since rising for eight consecutive months from June 2006 to January 2007.

The broader Nifty gained 0.23 percent to 7,954.35 not far from the record high of 7,968.25, hit on Monday.

The Nifty rose 3.02 percent for the month to mark its fourth consecutive monthly gain.

Markets will be closed on Friday for a local holiday.

Blue-chips were leading the gains, with Oil and Natural Gas Corp rising 1.6 percent. ONGC added to its 4 percent gain in the previous session on hopes of reforms on subsidies and gas prices ahead of the government's stake sale expected later this year.

Other state-run heavyweights also gained. Bharat Heavy Electricals Ltd added 5.13 percent, Gail India Ltd closed 1.8 percent higher and NMDC Ltd ended up 0.4 percent.

Shares in NHPC Ltd gained 3.3 percent on expectations that focus could shift to hydro power as an alternative to coal in electricity generation.

Railway stocks rallied, with Texmaco Rail and Engineering Ltd ending 5.34 percent higher after the government notified FDI rules for the sector.

SKS Microfinance Ltd's shares rose 2.2 percent after Morgan Stanley initiated coverage with an "overweight" rating, saying India's microfinance industry has $90 billion demand potential.

(Reporting by Indulal PM; Editing by Anand Basu)