BENGALURU, March 7 Reuters India39;s bluechips extended their rally to record highs for a second session in a row on Thursday, led by financials, while U.S. Federal Reserve Chair39;s rate cut assurance supported sentiment.

The NSE Nifty 50 and BSE Sensex gained 0.69 and 0.51 this week, respectively, posting the fourth straight weekly gain, the best such streak in three months. The benchmarks gained about 3 each in four weeks.

The momentum in domestic equities can persist till elections as history suggests, analysts at Ambit Capital said.

Banking is the only sector with relatively attractive valuations compared with the Nifty 50, they said.

Financialslinked indexes such as financial services, banks, publicsector banks and private banks gained between 0.6 and 4 this week.

Moody39;s Ratings said on Thursday that the outlook for India39;s banking system is positive, a day after JP Morgan reiterated it saw no structural challenges to deposit growth in the sector.

The broader, more domesticallyfocussed smallcaps dropped 2.18, while midcaps added 0.36, both underperforming the bluechip indexes on persisting concerns over excessive fund inflows and stretched valuations.

The profit growth distribution for small and midcaps is nothing extraordinary to warrant the elevated valuations, Ambit Capital said.

Bajaj Auto gained 10.44, its best week in three years. The automaker39;s stock was also the top percentage gainer on the Nifty 50 this week, aided by strong sales growth…