The 30-share BSE index surged 198.94 points, or 0.58 per cent, to end at 34,352.79. Intra-day, the index surged to a lifetime high of 34,385.67.
Following the sharp rally in the broader market, the total market capitalisation of BSE-listed companies surged by Rs 1.12 trillion to an all-time high of Rs 1.54 trillion ($2.4 trillion).
"The merry days continue in our markets as we step into the second week of the New Year calendar. Our markets opened higher citing positive cues from the US bourses and then continued gradual march in the uncharted territory," said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking.
"Sentiments were also boosted by the positivity from global peers and expectations on the upcoming union Budget, anticipating reforms for fiscal consolidation and enhancements in rural spending," said Anand James, Chief Market Strategist, Geojit Financial Services Ltd.
Among sectoral indices, IT stayed in the lead by surging 1.40 per cent, followed by capital goods index 1.22 per cent.
On the BSE, 1,792 stocks advanced, while 1,158 declined and 170 remained unchanged.