The 30-share barometer spurted by 173.74 points, or 0.70 percent, to close at record 24,858.59 points, surpassing previous all time high of 24,716.88 reached on May 26. (Agencies)
The 50-share Nifty of the National Stock Exchange also closed at record 7,367.10 points, up by 53.35 points, or 0.72 percent.
As expected by market participants, RBI kept policy rates and CRR unchanged but cut the statutory liquidity ratio (SLR) for banks by 0.50 percent.
The central bank, in its second bi-monthly monetary policy statement for 2014-15, unlocked about Rs 40,000 crore of banking fund by reducing SLR to 22.5 percent.
Metal stocks turned investors' fancy after surveys showed China's factory and services sectors had their best showings in months in May.
Tata Steel rose the most among Sensex scrips by 6.69 percent, followed by Sesa Sterlite which jumped 6.53 percent.
Oil major ONGC gained 4.40 percent and RIL by 1.15 percent, helping the Sensex to rise for second day in a row.
Among 30-index components, 17 stocks closed with gains.
Banking shares had a mixed trend on Tuesday with some counters such as SBI, ICICI Bank and Axis Bank succumbing to profit-booking, while HDFC Bank and and Yes Bank closed higher.
The BSE metal index gained the most by rising 5.06 percent to 13,155.30, followed by realty index by 3.15 percent to 1,981.79. The PSU index rose by 1.87 percent to 8,486.21 and Oil and gas index by 1.76 percent to 11,359.50.
Among global markets, benchmark indices in Hong Kong and Japan up by 0.91 percent to 0.66 percent respectively while European markets were down up to 0.33 percent in morning trade.
The 30-share barometer spurted by 173.74 points, or 0.70 percent, to close at record 24,858.59 points, surpassing previous all time high of 24,716.88 reached on May 26.