Besides, robust buying by overseas investors and tumbling crude oil prices supported the strong momentum in stocks.
The 50-scrip NSE Nifty index spurted by 32.05 points, or 0.38 percent, to close at new high of 8,389.90, surpassing previous record closing of 8,383.30 hit on November 12.
The 30-share BSE Sensex opened on a strong footing and continued its upward march to reclaim the key 28,000 mark to hit the day's high of 28,093.23 as buying picked up.
After some profit-booking at record levels, the barometer settled at 28,046.66 at a fresh record closing level, clocking net gain of 106.02 points or 0.38 percent over last close.
Thus, the Sensex bettered its previous closing peak of 28,008.90 reached on November 12. Indices have been hitting new highs after the government announced a slew of reform measures to boost economy amid positive economic data.
Driven by softening prices of fuel and food items, the WPI inflation cooled to a five year low of 1.77 percent in October raising hopes of rate cut by the Reserve Bank next month to boost economic growth.
State-run State Bank of India posted 30.5 percent growth in net profit at Rs 3,100.41 crore for the quarter ended September 30, pushing its shares up by 2.55 percent.
In metal pack, Hindalco surged 3.59 percent.
"WPI for October is one of the lowest in recent years... focus would again shift to global markets, progress on reforms and RBI monetary policy," said Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities.
Other gainers that lifted indices to new highs included CIL, GAIL, Bajaj Auto, HDFC Bank, Hero MotoCorp, Infosys, TCS, ICICI Bank and RIL. Overall, 21 of 30 Sensex stocks closed up.
A firming trend at the other Asian markets and a mixed opening in Europe too influenced sentiments, brokers said.
Meanwhile, Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 690.61 crore yesterday.
Sectorwise, BSE Metal index rose the most by 2.53 percent, followed by Realty 2.35 percent, Oil&Gas 1.06 percent, Banking 0.72 percent and Auto 0.62 percent among others. In line with bullish sentiment, midcap index and smallcap, both indices ended 0.52 percent higher.

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