Both the S&P BSE benchmark Sensex and CNX Nifty conquered new historic peaks in post-Diwali week on persistent buying on hopes of more reform measures from the Narendra Modi Government.
There were also expectations of better growth in the second half of the current fiscal besides heavy buying by foreign funds.
Strong global rally after Japan unexpectedly expanded its monetary stimulus programme and US economy grew at a robust pace also boosted the domestic market sentiment.
Investors cheered the Modi Government's move to ease FDI rules in construction sector and the US Federal Reserve decision to stick to low interest rate regime.
Brokers said fresh dose of capital inflows, healthy corporate earnings and rating agency Moody's favourable report on rating profile of India also boosted buying as investors bought shares across-the-board.
The Sensex resumed strong at 26,959.57 and continued to move upwards to settle at a new historic high of 27,894.32 before concluding the week at 27,865.83, showing a robust rise of 1,014.78 points, or 3.78 per cent, over the last week.
The 30-share index has gained a staggering 1,757.30 points, or 6.73, per cent, in the two weeks.
The 50-issue CNX Nifty of NSE also flared up by 307.65 points, or 3.84 per cent, to finish at 8,322.20 after hitting a fresh lifetime high of 8,330.75.
"Much-needed reforms from the new Government, strong Q2 performance by India Inc, Fed's low interest rate regime combined with Bank of Japan's sudden stimulus announcement gave the markets a huge boost," said Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio.
Sentiment also got a leg up after the US released forecast-beating economic growth data on Thursday. The world's biggest economy grew at a healthy 3.5 per cent in the September quarter.
Continued fall in global crude oil prices and renewed buying by foreign funds fuelled the spectacular rally.
"Fed's statement (on keeping interest rates low) injected confidence in the markets. This, combined with strong earnings performance by index stocks, took markets beyond all their previous highs," said Rakesh Goyal, Senior Vice-President, Bonanza Portfolio.
Foreign portfolio investors (FPIs) and FIIs bought shares net Rs 3,953.96 crore during the week, as per the SEBI's record, including the provisional figure of October 31.
Twenty-seven scrips out of the 30-share Sensex pack finished higher, while only three ended lower.
Major gainers were Gail India (10.10 pct), Hindalco (9.27 pct), HDFC (7.19 pct), Tata Steel (6.61 pct), BHEL (6.54 pct), Tata Power (6.47 pct), Infosys (6.45 pct), Cipla (6.15 pct), Larsen (6.11 pct), TCS (5.64 pct), Maruti (5.48 pct), Reliance Ind (4.85 pct), Coal India (4.71 pct), SCI (4.62 pct) , Sun Pharma (4.37 pct), Dr Reddy's Lab (4.21 pct), Axis Bank (3.52 pct), ICICI Bank (3.12 pct) and Bajaj Auto (2.70 pct).
Among the few laggards, Bharti Airtel fell by 3.10 pct, HUL 2.60 pct and Hero MotoCorp lost 1.80 pct.
Among the S&P BSE sectoral indices, IT rose by 5.37 pct followed by CG 5.18 pct, Metal 4.80 pct, Realty 4.35 pct, Power 4.01 pct, Teck 3.86 pct, Bankex 3.43 pct, Oil&gas 3.35 pct, HC 3.11 pct and Auto gained 3.07 pct.
Small and and mid-cap indices also rose by 2.52 pct and 1.67 per cent respectively on sustained buying from retail investors.
The total turnover at BSE and NSE zoomed to Rs 15,192.70 crore and Rs 85,382.17 crore respectively from the last weekend's levels of Rs 9,788.78 crore and Rs 48,944.94 crore.