Sensex, Nifty hit record high; India-focused stocks rally

MUMBAI (Reuters) - The BSE Sensex and Nifty hit a record high on Tuesday as strong buying by foreign investors continued to bolster blue chips in the lead-up to general elections, especially companies more geared towards the domestic economy such as HDFC Bank.

The broader Nifty gained as much as 1.1 percent to a record high of 6,574.95 points, surpassing its previous record high hit on March 11.

The rally reflects hopes that the opposition Bharatiya Janata Party, perceived by markets to be more business friendly, will win elections that kick off next month, analysts have said.

A slight expansion in industrial output and a further cooling in stubbornly high inflation have also boosted investor sentiment, offsetting concerns about global risk factors such as

political tensions in Ukraine and China's economic slowdown which have been weighing on stock markets elsewhere.

Goldman Sachs upgraded Indian shares to "overweight" from "marketweight," citing improving economic fundamentals, including a narrowing current account deficit, and expectations that corporate earnings had bottomed out.

"FIIs (foreign institutional investors) are buying continuously," said Suresh Parmar, head of institutional equities at KJMC Capital Markets.

"There are no specific triggers other than portfolio building ahead of elections. However, global events could hold the key in the short-term," he added.

The Nifty was up 0.72 percent at 0535 GMT.

The benchmark BSE Sensex was up 0.7 percent after earlier rising as much as 1.1 percent to an all-time high of 22,040.72 points, above its previous record hit on March 10.

Overseas funds were net buyers of $160.6 million worth of shares on Friday, marking a 20th buying session in the previous 21, for a net total of $1.6 billion, exchange and regulatory data shows. Markets were closed on Monday for a public holiday.

Banks led gains on Tuesday, with HDFC Bank up 1.1 percent and State Bank of India 2.7 percent.

Among other domestic-oriented blue chips, power equipment maker Bharat Heavy Electricals gained 2 percent, while cigarette maker rose 1.4 percent.

Shares of Maruti Suzuki Ltd surged as much as 9.8 percent after it said on Saturday that it would seek minority shareholder approval for a plan to outsource production at a new factory to Japan's Suzuki Motor Corp .

Shares in the auto maker were last up 8.1 percent.

(Reporting by Abhishek Vishnoi and Indulal PM; Editing by Kim Coghill)