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.The Fii's 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.
But shares are susceptible to profit-taking, especially if consumer inflation data for February, due on Wednesday, rises more than expected. That would be contrary to expectations that the Reserve Bank of India would keep interest rates on hold at its policy review on April 1.
The forecast is 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.
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.
Construction company Larsen and Toubro surged 3.19 percent, while Maruti Suzuki India Ltd ended 3.8 percent higher.
Private sector lenders surged, with HDFC Bank up 3.23 percent and Kotak Mahindra Bank Ltd jumping 5.7 percent.
Morgan Stanley has turned "overweight" across all private sector lenders in India, after previously keeping that rating for only HDFC Bank, Housing Development Finance Corp Ltd , ICICI Bank Ltd , and Axis Bank Ltd .
Reliance Industries Ltd rose 1.9 percent, adding to Friday's 5.7 percent gain, after KG-D6 block partner BP Plc highlighted recent discoveries in two blocks as "potentially commercial" in its annual report out on Thursday.
However, exporters fell, with Tata Consultancy Services Ltd losing 3.9 percent and Dr.Reddy's Laboratories Ltd 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 fell 2.1 percent. Steel Authority of India lost 2.5 percent, while Tata Steel ended 1.9 percent lower.