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By Bharath Rajeswaran and Manvi Pant

BENGALURU, Sept 23 (Reuters) - Indian shares hit record

highs for the third straight session on Monday as the outsized

U.S. rate cut last week boosted investors' risk appetite.

The Nifty 50 index rose 0.57% to 25,939.05, while

the S&P BSE Sensex gained 0.45% to 84,928.61, notching

record closing highs. They also hit all-time highs in the

session.

The broader, more domestically focussed small-

and mid-caps rose 1.1% and 0.8%, respectively.

The rally has pushed the benchmark indexes into "overbought"

territory, with the relative strength index above 70, according

to LSEG data.

But that has not deterred investors.

"India remains the best long-term opportunity for equity

investors globally," Christopher Wood, global head of equity

strategy at Jefferies, said in a note.

Even if there is a "meaningful" correction at these elevated

valuations, it is only likely to result in increased foreign

buying, Wood said.

After the U.S. rate cut on Wednesday, foreign institutional

investors bought Indian shares worth 115.16 billion rupees ($1.4

billion) over Thursday and Friday.

On the day, twelve of the 13 major sectors advanced, led by

a 3.4% jump in public sector banks. Oil stocks

jumped 1.9%, led by ONGC.

ONGC advanced 3.2% after the company's overseas

unit and eight oil producers signed a deal to produce natural

gas in Azerbaijan.

Mahindra & Mahindra gained 3.4% to a record high

after Goldman Sachs hiked its price target on the automaker's

stock, citing robust growth prospects.

ONGC and M&M were among the top three Nifty gainers.

Drug maker Glenmark Pharma climbed 4.3% after the

U.S. drug regulator classified one of the company's facilities

as satisfactory after a routine probe.

City gas distributor Adani Total Gas gained 5.9%

after securing financing worth $375 million to expand its

network.

($1 = 83.5300 Indian rupees)