The 30-share Sensex touched all-time high of 22,307.74 intra-day. This is the fourth day in succession that the key index has risen to record high levels intra-day.
The BSE barometer moved for most of the day in the positive terrain before settling at 22,214.37, up 119.07 points or 0.54 per cent from its previous close.
The NSE Nifty rose by 40.35 points or 0.61 per cent to end at new peak of 6,641.75. It recorded historical intra-trade high of 6,673.95.
Foreign institutional investors (FIIs) bought shares worth Rs 1,004.52 crore yesterday, as per provisional data with stock exchanges.
Brokers also ascribed the rise to hectic short-covering on the last day of March contract of Futures and Options.
Some participants, however, warned that the much-needed correction is likely to come after elections.
SBI notched up a gain of 4.04 per cent, the biggest gain among Sensex stocks. Bharti Airtel was up 4.00 per cent, Hero Motocorp 3.11 per cent, Gail India 1.75 per cent, NTPC 1.74 per cent, Bajaj Auto 1.62 per cent, HUL 1.37 per cent, RIL 1.34 per cent, ONGC 1.34 per cent, Tata Power 1.29 per cent, BHEL 1.23 per centand Wipro 1.14 per cent.
However, Dr Reddy's Lab fell by 1.80 pct followed by SSLT 1.26 pct, Tata Motors 1.10 pct and Sun Pharma 1.00 pct.
Bourses have been on a rising spree since Monday when it closed above the 22,000-level for the first time with foreign institutional investors (FII) pouring in money into stocks. On Tuesday, it closed lower by a marginal 0.27 points though.
Consistent pumping of money by FIIS had lifted the BSE benchmark index Sensex and broader NSE Nifty to their lifetime closing high of 22,095.30 and 6,601.40 points respectively yesterday.
Among the S&P BSE sectoral indices, consumer durables rose by 1.46 per cent, oil&gas 1.28 per cent, realty 1.06 per cent, power 0.92 per cent, bankex 0.74 per cent and consumer goods 0.69 per cent.
The market breadth turned positive as 1,673 stocks ended in the green, 1,127 stocks finished in the red while 161 ruled steady. The total market turnover dropped to Rs 2,285.81 crore from Rs 4,210.86 crore yesterday.
Of 30 Sensex stocks, 20 ended higher, nine finished lower while Axis Bank ruled steady.
Asian markets ended mixed amid concerns that US President Barack Obama might step up pressure on Russia.
Key benchmark indices in Taiwan, Hong Kong, Japan firmed up by 0.48-1.01 per cent, while indices in China and Hong Kong eased by 0.24-0.83 per cent.
European markets were also trading narrowly mixed on concerns that the crisis in Ukraine may escalate. Key indices in UK and France eased by 0.05-0.34 per cent, while Germany's DAX was quoted slightly higher by 0.08 per cent.
* Live: BSE Sensex
Indian shares continue to set records; state-run lenders, derivatives aid
(Reuters) Indian shares rose to record highs for a fourth straight session on Thursday, as state-run lenders including State Bank of India extended recent gains on broker upgrades and on hopes of some easing at the central bank's policy review on Tuesday.
Higher rollovers on an absolute basis coupled with high roll cost during the expiry of March derivative contracts also lent support and indicates market participants are bullish for the April series, dealers added.
Besides the central bank's policy review on April 1, where it is widely expected to keeps rates unchanged, investors say the forthcoming general elections would act as the next key catalyst for markets.
Overseas investors have helped underpin gains, with net purchases in shares reaching $2.75 billion so far this month, according to regulatory data.
"Profit-booking cannot be ruled out, but it remains a buy on dips due to flows and macro improvement," said Deven Choksey, managing director at K R Choksey Securities.
"Also, India's central bank may ease the rates a bit on April 1 in support of foreign investors."
The NSE index rose as much as 1.1 percent to an all-time high of 6,673.95, while the benchmark BSE index gained 0.96 percent to a lifetime high of 22,307.74.
The BSE index closed 0.54 percent higher, while the NSE index ended up 0.61 percent.
Shares in state-run banks gained after Goldman Sachs upgraded the stocks, saying neglected lenders are poised for a rally on emerging macroeconomic and political clarity.
State Bank of India rose 3.9 percent, Punjab National Bank ended higher 3.8 percent, and Bank of Baroda gained 2.4 percent.
Non-banking state-run infrastructure lender IDFC Ltd also rose 5.2 percent.
Other blue chips also rose: Reliance Industries gained 1.1 percent, while ITC ended 0.2 percent higher.
Airline shares gained after the central bank on Wednesday extended the deadline for raising working capital via external commercial borrowings by domestic airlines to March 2015 from December 2013.
Jet Airways (India) Ltd, the country's No.2 airline by domestic market share, gained 2.6 percent, while SpiceJet Ltd surged 3.5 percent.
Talwalkars Better Value Fitness Ltd surged as much as 12.8 percent to 182.40 rupees, its highest in more than 13 months, after the Economic Times daily reported UK health and fitness group The David Lloyd is looking to buy around 20 percent in the company, citing two people familiar with the matter.
The stock ended 8 percent higher after the company said in a clarification to exchanges that there have been no negotiations for sale of any equity. However, exporters continued to fall on fears of margin erosion as the rupee was holding around its eight-month high.
Among pharmaceutical exporters, Sun Pharmaceutical Industries Ltd fell 1.1 percent and Dr.Reddy's Laboratories Ltd lost 1.7 percent.
In software stocks, Infosys Ltd fell 0.55 percent and HCL Technologies Ltd ended 0.6 percent lower.