By Rajendra Jadhav

MUMBAI, Oct 29 (Reuters) - Indian buyers of gold brushed off record high prices and made purchases for the Dhanteras and Diwali festivals starting on Tuesday, hoping bullion would continue to rally and deliver promising returns amid a cooling stock market, industry officials told Reuters.

Robust demand in the world's second-biggest gold consumer could further support global prices , which hit record highs last week. Rising demand for imports of gold could also widen India's trade deficit and put pressure on the rupee

.

"People are still into gold big time, even with prices at record highs during Dhanteras. With gold giving better returns than the stock market, there's been solid demand for coins and bars," said Saurabh Gadgil, chairman of PNG Jewellers .

Indians were celebrating Dhanteras on Tuesday, a day considered auspicious for buying gold and one of the busiest gold-buying days in India.

Local gold prices jumped to a record high of 78,919 rupees per 10 grams last week, marking an increase of more than 31% since last year's Diwali. India's NSE Nifty 50 share index has dropped about 7% from a record high hit on Sept. 27.

Investors are working to diversify their portfolios by adding to or increasing their allocations in gold and silver, Gadgil said.

"In value terms, turnover during this year's Dhanteras is expected to be significantly higher than last year due to higher prices. In volume terms, it may be slightly lower or around the same level as last year," Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA), said.

Indian dealers on Tuesday charged a premium of up to $1 an ounce over official domestic prices – inclusive of 6% import and 3% sales levies, up from the last week’s discount of $4.

Local silver futures hit a record high of 100,081 rupees per kilogram last week.

"Demand for silver coins and bars was strong today, as silver has delivered better returns than gold in recent months," said Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer.

(Reporting by Rajendra Jadhav; Editing by Susan Fenton)

((rajendra.jadhav@thomsonreuters.com; Reuters Messaging: x.com/Rajendra1857))