The week opened with investors cheering the Prime Minister's encouraging Independence Day speech which talked about making India the hub of manufacturing sector with a focus on improving infrastructure.
Later, market started to consolidate near its all-time peak, despite some correction in mid-week.
Continued FII buying amid encouraging US economic data resulting into positive global cues along with good retail investors participation also lifted the market sentiment.
The BSE S&P Sensex resumed higher and marked life time high of 26,530.67 before closing the week slightly lower at 26,419.55, still showing a gain of 316.32 points or 1.21 per cent.
In straight two weeks, it has zoomed 1,090.41 points or 4.30 per cent.
The NSE 50-share Nifty gained 121.50 points, or 1.56 per cent to log its record closing high of 7,913.20. It registered an intra-day new peak of 7,929.05.
Barring FMCG sector, the market saw broad-based buying as rest other 11 sectoral indices closed with gains led by consumer durables, healthcare, banking, auto, capital goods, PSUs, power and oil & gas shares.
Shares from mid-cap and small-cap companies also saw extensive buying from retail investors and outperformed the Sensex.
The S&P BSE small-cap and mid-cap indices closed strong by 4.83 per cent and 3.70 per cent.
Foreign Portfolio Investors (FPIs) bought shares worth Rs 2,939.12 crore in last six sessions since August 14, including provisional data of August 22.
The market also got support after brent oil price hovered near 14-month low on excess supply on reducing geo-political concerns. Investors feel this will give respite to Prime Minister Narendra Modi's government to tackle both current account and fiscal deficits and will also lower the subsidy bill, traders said.
The sentiment too got boost after RBI's comments on growth and also hopes of an upward revision of India's sovereign rating outlook by global rating agency S&P after the country's government target to lower the fiscal deficit and heavy buying by foreign funds in bond market worth Rs 16,071.97 crore on Wednesday, showing more faith on India.
Jignesh Chaudhary, Head of Research, Veracity Broking Services said, "The Indian equity markets achieved new highs in the trading week, they started with a good growth and pretty much in the green due to FII's continued buying in Indian stocks.
"Next week would be expiry for derivative markets so there are chances that the traders would be dealing in very limited scrips.
"The economic calendar would be active for US economy in the coming week. These activities would certainly affect the markets. The technical indicators are suggesting positive movements continuing for the markets," he added.
In all, 22 stocks out of the 30-share Sensex pack finished in the green while others settled in the red.
Cipla was the top gainer with a surge of 11.18 per cent followed by BHEL (7.06 per cent), SBI (6.85 per cent), Axis Bank (6.50 per cent), Bajaj Auto (6.00 per cent), Tata Motors (5.55 per cent), Sun Pharma (5.25 per cent), M&M (4.86 per cent), ONGC (4.12 per cent), ICICI Bank (3.99 per cent), L&T (3.71 per cent), Tata Power (3.14 per cent), Maruti Suzuki (3.11 per cent), Dr Reddy's Lab (2.68 per cent), HDFC Bank (2.52 per cent), Wipro (2.05 per cent) and Hindalco (1.99 per cent).
However, HDFC dropped by 7.10 per cent, ITC (3.66 per cent), TCS (1.40 per cent) and HUL (1.36 per cent).
Among the S&P BSE sectoral indices, CD spurted by 5.59 per cent, HC (5.31 per cent), Bankex (4.92 per cent), Auto (4.20 per cent), CG (3.77 per cent), Power (2.13 per cent) and Oil & Gas (2.08 per cent) while FMCG dipped by 1.32 per cent.
The total turnover at BSE and NSE shot up to Rs 14,981.33 crore and Rs 79,839.99 crore from Rs 10,052.27 crore and Rs 57,665.96 crore last week, respectively.