Shares of PSU, power, banking, capital goods, metal, realty and refinery firms firmed up sharply on good buying support.
Mid and small-cap indices shot up by 3.21 per cent and 2.45 per cent respectively on strong demand from retail investors.
However, shares of IT and Pharma sectors declined on profit-booking.
The BSE Sensex opened higher at 21,827.50 and rose further to an all-time intra-day high of 22,363.97 before ending at a new closing peak of 22,339.97, a gain of 584.65 points, or 2.69 per cent, over the last week.
The NSE Nifty rose by 201 points, or 3.09 per cent, to register a historic closing high of 6,695.90. It recorded a life-time intra-day high of 6,702.60.
Hectic activity on expiry of derivative contracts on March 27 also helped domestic markets to remain upbeat.
Consistent pumping of money by FIIs boosted the market sentiment as they invested net Rs 7,562.57 crore during this week, including the provisional figure of March 28, as per the SEBI data.
IT stocks declined on profit-booking following rise in the rupee value against the dollar which will adversely affects operating profit margins of IT firms in dollar terms as the sector derives a lion's share of revenue from exports.
The Reserve Bank of India's first Bi-monthly monetary policy statement 2014-15 on Tuesday, April 1, will dictate near term trend on the bourses, a broker said.
Outcome of the upcoming Lok Sabha elections also the another factor which will decide the future of the market.
8.54 per cent, Bharti Airtel 8.12 per cent, Gail India 7.80 per cent, Hindalco 7.55 per cent, * Bharat Heavy Electricals 6.81 per cent, NTPC 5.64 per cent, Tata Steel 5.26 per cent, Axis Bank 5.14 per cent, ICICI Bank
3.31 per cent.
However, Dr Reddys Laboratories fell by 6.08 per cent, * Sun Pharmaceuticals Industries 3.57 per cent, Wipro 2.93 per cent, Infosys 1.10 per cent, * Tata Consultancy Services 1.88 per cent and TCS 0.94 per cent.
Among the S&P BSE sectoral indices, PSU rose by 8.17 per cent followed by Power 6.71 per cent, Banking 5.67 per cent, CG 5.43 per cent, Metal 5.40 per cent, Realty 4.32 per cent, Oil&Gas 4.15 per cent and Auto 2.91 per cent while HC fell by 2.45 per cent and IT 1.10 per cent.
Total turnover at the BSE and NSE was Rs 13,922.82 crore and Rs 72,548.61 crore, respectively as against last weekend's level of at Rs 17,642.28 crore and Rs 46,276.43 crore.