BENGALURU, Dec 5 (Reuters) - India's benchmark indexes hit fresh record highs on Tuesday for a second straight session as domestic markets continued to be encouraged by state election wins for the current ruling party, even as a global stock rally eased ahead of key U.S. data.

The NSE Nifty 50 index rose 0.52% to 20,794.50 points, while the S&P BSE Sensex was up 0.50% to 69,204.10 as of 9:51 a.m. IST.

Banks gained 0.7% while public sector banks added 1.3%. Several brokerages picked financials and large-caps among their most preferred sectors as they anticipated a rally in domestic equities ahead of 2024 general elections.

India's ruling Bharatiya Janata Party won assembly elections in three key states, results showed over the weekend.

"Foreign portfolio investors have reversed their selling strategy and have been consistent buyers during last seven sessions," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

"There is accumulation happening in frontline banking stocks. The market has potential to go up by another 5% in the near-term," Vijayakumar added.

HDFC Bank and ICICI Bank gained about 1% while Axis Bank and State Bank of India added 1.75% each.

Oil & gas stocks extended gains, rising 0.9%, as Brent Crude futures stabilised near $78 per barrel, on demand concerns and uncertainty over supply cuts. A fall in crude oil prices is positive for importers of the commodity like India and its oil marketing companies.

Bharat Petroleum Corp jumped 3% and was among the top Nifty 50 gainers.

The more domestic-focussed small- and mid-caps added 0.4% and 0.6%, respectively, to hit fresh record highs.

Adani Group stocks jumped between 2% and 6%, extending their rally for the second session. Adani Enterprises and Adani Ports and Special Economic Zone were the top Nifty 50 gainers.

Wall Street equities retreated overnight after the recent rally, ahead of key U.S. labour market data that could influence the U.S. Federal Reserve's rate policy. Asian markets were subdued.

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman and Nivedita Bhattacharje)