The 30-share index gained 73.39 points, or 0.27 percent, to 27,185.60 with power, realty, infrastructure, PSU, healthcare, and metal sector stocks leading the rally. The index had gained 619.70 points in the last two sessions.
In a similar fashion, the broad-based National Stock Exchange index Nifty moved up by 21.85 points, 0.27 percent, to 8,136.60.
Brokers said that sentiments remained upbeat as fears of capital outflows receded on US Fed's continued pledge to retain rates at low levels.
Rising optimism over trade ties with China also boosted sentiments, they said.
Shares of Tata Steel, Tata Power, Tata Motors, TCS were in good demand and rose up to 1.97 percent after Moody's on Thursday upgraded ratings of Tata Group firms.
Meanwhile, India on Thursday signed a 5-year trade and economic cooperation agreement with China with a view to improve the trade balance and obtain USD 20 billion Chinese investments.
In the Asian region, Hong Kong's Hang Seng index was up 0.69 percent, while Japan's Nikkei moved up by 0.68 points in the morning trade on Friday.
US Dow Jones Industrial Average ended at yet another record high by rising 0.64 percent in Thursday's trade on Fed's continued pledge to retain raters at low levels.

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