Indian shares inched higher on Monday, boosted by gains in utility and financial stocks, as cheer over Prime Minister Narendra Modi's return for a second term in office continued to buoy investor sentiment.

Modi-led Bharatiya Janata Party (BJP) witnessed a landslide victory in the general election results on Thursday and markets have been jubilant over hopes that the prime minister would pursue business-friendly policies.

"We have a new government and we are seeing stock specific rally. There will be sectors which are likely to outperform and markets are now waiting for a new policy," said AK Prabhakar, head of research at IDBI Capital in Mumbai.

The broader NSE index was up 0.35 per cent at 11885.75 as of 0500 GMT, while the benchmark BSE index was trading 0.42 per cent higher at 39601.55.

Shares of NTPC Ltd and Yes Bank Ltd were up over 4.5 per cent each, while Power Grid Corporation India was trading nearly 2 per cent higher.

Industrial conglomerate Larsen & Toubro, which started a hostile takeover bid for Bengaluru-based IT firm Mindtree Ltd in March, was among the top five gainers on the NSE index. The company on Friday increased its stake in Mindtree to over 28 per cent.

Shares of Interglobe Aviation Ltd rose as much 1.9 per cent to 1,653 rupees. Interglobe is scheduled to post quarterly results later in the day.

JSW Steel and Bharti Airtel were among the major losers, both inching nearly 2 per cent lower.