By Abhishek Vishnoi
MUMBAI (Reuters) - The BSE Sensex and Nifty hit record highs on Monday as Prime Minister Narendra Modi's push to expand his cabinet raised further hopes for economic reforms, but gave up most of their gains towards the end of the session as investors booked profits.
The Sensex earlier rose as much as 0.57 percent to a record high of 28,027.96, its fifth all-time high in six sessions.
Modi beefed up his cabinet on Sunday, appointing a separate defence minister to spur military modernization and free Finance Minister Arun Jaitley to focus on the budget and reforms to revive the economy.
The larger cabinet was welcomed by business groups impatient for the Modi government to get the economy out of a long slowdown.
But traders also said the temptation to book profits was high ahead of consumer inflation data on Wednesday and given recent strong gains. The Sensex has gained 32.30 percent this year making India the best performing equity market in Asia.
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"The freedom to chose cabinet underscores Modi's ability to take fast decisions. This phase of profit-taking would not last for long," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.
The benchmark Sensex rose 0.02 percent, or 6.10 points, to end at 27,874.73.
The broader Nifty edged up 0.09 percent, or 7.25 points, to end at 8,344.25, also marking its record close.
Among top gainers, ITC Ltd , the country's largest cigarette maker, surged 4.5 percent on hopes the new health minister may not pursue a much speculated tax increase.
Other defensive stocks also led the gains as investors turned to safe havens amid string of record highs on indexes.
Sun Pharmaceutical Industries Ltd ended 1.9 percent higher after earlier hitting an all-time high of 932.5 rupees after unit Taro Pharmaceutical Industries' results.
Dr.Reddy's Laboratories Ltd and Hindustan Unilever Ltd ended up 1.3 percent each.
Among other stocks, Jet Airways Ltd rose 6.9 percent on results and fund raising plan.
Crompton Greaves Ltd gained 2.8 percent after the company said it would seek shareholder approval to hike foreign portfolio investment limit.
Also, railway stocks rallied after the appointment of new Railway Minister Suresh Prabhu stoked hopes for reforms and investment into the sector, traders said.
Texmaco Rail and Engineering Ltd shares surged 9.1 percent, while Titagarh Wagons Ltd rose 4.2 percent.
However among stocks that fell, Larsen and Toubro Ltd fell 2.1 percent after the company's July-September earnings missed analyst's estimates.
Investors also booked profits in recent outperformers such as Oil and Natural Gas Corp , which fell 3.8 percent, and Tata Motors , down 2.1 percent.
(Editing by Anand Basu)