MUMBAI The BSE Sensex ended up slightly on Monday after rising to a record high for a third consecutive session as strong foreign buying continued to boost domestic-focused shares such as those of HDFC Bank, but momentum waned as exporters slumped on a stronger currency.
Sentiment remains supported after foreign investors bought a net 25.77 billion rupees of shares on Friday, their biggest daily purchases since December 9. That marked a 16th consecutive buying session for a net total of about $1.4 billion.
Overseas investors are also building up long positions in NSE futures across indexes, especially in banks, in an indication they could be betting on a sustained record-setting gain, according to traders.
But shares are seen susceptible to profit-taking, especially if consumer inflation data for February, due on Wednesday, rises more than expected. That would dent expectations that the Reserve Bank of India would keep interest rates on hold at its policy review on April 1.
A Reuters poll showed annual retail price inflation is expected to have eased to 8.35 percent last month, the slowest in two years, from 8.79 percent in January.
"Definitely profit-taking would happen in some sectors, but this break above 22,000 on Sensex has happened after a lot of years and the uptrend therefore will remain intact," said G Chokkalingam, founder of research and fund advisory company Equinomics
The BSE Sensex rose 0.07 percent, or 15.04 points, to close at 21,934.83. It earlier hit an all-time high at 22,023.98.
Nifty rose 0.16 percent, or 10.60 points, to end at 6,537.25. The index also marked a record high of 6,562.20, marking its second consecutive all-time high.
Both indexes have gained for a fifth consecutive session. Monday's modest gains came amid a 1.2 percent fall in MSCI's broadest index of Asia-Pacific shares outside Japan, which was hit by concerns about worsening Chinese trade data.
For the month, India's BSE index is the second-largest gainer in Asia in dollar terms, after Pakistan.
Analysts say gains are driven by foreign investors switching from exporters to domestic-focused sectors on hopes for an improving economy and as the opposition Bharatiya Janata Party, led by its prime ministerial candidate Narendra Modi, are tipped to win the general elections that conclude in May.
Construction company Larsen and Toubro (LART.NS) surged 3.19 percent, while carmaker Maruti Suzuki India Ltd (MRTI.NS) ended 3.8 percent higher.
Private sector lenders surged, with HDFC Bank (HDBK.NS) up 3.23 percent and Kotak Mahindra Bank Ltd (KTKM.NS) jumping 5.7 percent.
Morgan Stanley has turned "overweight" across all private sector lenders in India, after previously keeping that stance for only HDFC Bank, Housing Development Finance Corp Ltd (HDFC.NS), ICICI Bank Ltd (ICBK.NS), and Axis Bank Ltd (AXBK.NS).
Reliance Industries Ltd (RELI.NS) rose 1.9 percent, adding to Friday's 5.7 percent gain, after KG-D6 block partner BP Plc (BP.L) highlighted recent discoveries in two blocks as "potentially commercial" in its annual report out on Thursday.
However, exporters fell, with Tata Consultancy Services Ltd (TCS.NS) losing 3.9 percent and Dr.Reddy's Laboratories Ltd (REDY.NS) dropping 1.4 percent, reversing last year's trend of foreign investors betting big on drugmakers and software services exporters.
The falls were also led by an Indian rupee that has strengthened 1.1 percent this month against the dollar as of Friday on the back of strong foreign flows.
Shares of metal companies also plunged after data on Saturday showed China's exports unexpectedly tumbled in February, raising fears of a slowdown in the world's second-largest economy.
Hindalco Industries Ltd (HALC.NS) fell 2.1 percent. Steel Authority of India (SAIL.NS) lost 2.5 percent, while Tata Steel (TISC.NS) ended 1.9 percent lower.
(Editing by Prateek Chatterjee)