* BSE index gains 0.72 pct; NSE index up 0.94 pct
* Both indexes hit record closing highs
* Fertiliser, infrastructure stocks rally
By Indulal PM
MUMBAI, June 9 (Reuters) - Indian shares surged on Monday torecord highs as blue chips such as Coal India andLarsen & Toubro continued to rally on hopes ofwide-ranging reforms by the new Narendra Modi government.
Foreign institutional investors bought a net 12.83 billionrupees ($217.1 million) worth of shares on Friday, a sixthconsecutive session of buying that brought their total so farthis year to $8.5 billion, according to exchange and regulatorydata.
Expectations of reforms and optimism about a recovery in thedomestic economy have sent domestic shares up 21.4 percent sofar this year, outperforming a 5 percent gain in the broaderMSCI Asia-Pacific index excluding Japan.
"It's a strong bull run what we are seeing now. Union budgetwould be the next key event, but that would not be more than afinancial statement," said Jagannadham Thunuguntla, chiefstrategist at SMC Global Securities.
"What the market is expecting is a key decision makingprocess and early signs show that the (government's) directionis right. Unless something dramatic happens, the market is setfor further upmove," said Thunuguntla.
The benchmark BSE index rose as much as 0.98percent to hit a record high of 25,644.77, surpassing thehighest level posted on Friday. The index closed 0.72 percenthigher at 25,580.21.
The broader NSE index gained as much as 1.2 percentto hit an all-time high of 7,673.70. The index closed up 0.94percent at 7,654.60.
Shares in Larsen & Toubro (L&T) closed 3.6 percent higher,gaining for the sixth straight session as investors hope thatthe new government's reform agenda would mainly focus oninfrastructure sector, where L&T is a major player.
The stock has gained 63.7 percent so far this year.
Shares in Bajaj Auto Ltd jumped 5.5 percent, thehighest single-day rise since Aug. 30, 2013, while Coal IndiaLtd gained 5.8 percent to 413.20 rupees.
Fertilizer stocks rallied after government official toldReuters that India plans to raise the price of urea, thefertiliser most used by its farmers, by at least 10 percent.
Shares in Rashtriya Chemicals and Fertilizers Ltd gained 5.5 percent, while Chambal Fertilisers and Chemicals Ltd rose 9.4 percent.
Among other gainers, real estate stocks rose, with realtyindex of the BSE closing 6.01 percent higher. Sharesin DLF Ltd ended 3.5 percent higher, while Unitech Ltd gained 17.03 percent.
Oil and Natural Gas Corp was among the laggards,losing 2.7 percent as investors preferred to take profit afterthe stock jumped 12.1 percent to hit an all-time high.
Shares in Infosys continued to be under pressure. The stockclosed 0.6 percent adding to its 1.3 percent fall on Friday onconcerns after some key resignations.
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FACTORS TO WATCH * Euro nudges higher, shaking off post-ECB easing impact * Oil rises above $109 on strong global growth * World stocks inch towards all-time high * Foreign institutional investor flows * For closing rates of Indian ADRs
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(Editing by Anand Basu)