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Financial and energy stocks led Indian shares to new all-time highs on Monday as key wins for the ruling party in state elections lifted the domestic market, already boosted by strong macroeconomic data and easing global interest rate expectations.

The NSE Nifty 50 index rose 2.07% to 20,686.80 points, notching a record high for second session in a row. The S&P BSE Sensex climbed 2.05% to 68,865.12, a record close.

Both the benchmarks logged their best session in 14 months and settled in the over-bought zone.

India's ruling Bharatiya Janata Party (BJP) secured key victories in three of the four state assembly elections, results showed over the weekend.

"The party in Indian equity markets will go on," said Gaurav Dua, senior vice president and head of capital market strategy at Sharekhan by BNP Paribas.

"The strong macroeconomic data, favourable political outcome from state assembly elections and improving global environment has moved sentiment to risk-on from risk-off," Dua added.

Dua expects a further 5%-8% rally in the benchmark Nifty 50 between now and Lok Sabha elections in May 2024.

Eleven of the 13 major sectors hit new all-time highs on Monday. Financial services rose up 3.23% and energy stocks climbed 2.61%, leading sectoral gains. The two indexes account for about 46.5% weightage in Nifty 50 index.

Index heavyweights Reliance Industries, ICICI Bank, HDFC Bank gained between 1% and 5%.

The Nifty had hit a record high on Friday, on the back of strong quarterly growth and monthly factory activity data.

Larsen & Toubro jumped 3.93% after several analysts identified the company as one of their preferred picks, citing potential gains from the government's focus on infrastructure and welfare spending.

Adani group stocks advanced between 1.4% and 10% and topped gains in several sectoral indexes including metals and energy.

Eicher Motors hit a record high on robust November sales.