The National Stock Exchange's broad-based index Nifty also closed at record high of 6,601.40 points, up by 11.65 points over the last close. (Agencies)
Both the indices surged to new record intra-day high levels. The Sensex touched the peak of 22,172.20 points while Nifty rose to 6,627.45 points in day trade.
After initial surge, markets rolled back to minimize the day's gains on profit booking and investors squaring up their pending positions ahead of monthly settlement in the derivatives segment on Thursday.
Brokers said foreign institutional investors remained net buyers on improving economic growth and rupee rising to over seven-month high against the dollar.
A firming global trend after US consumer confidence climbed to a six-year high further supported the uptrend.
In 30-BSE index components, 16 stocks climbed.
Gains in Larsen & Toubro, Reliance Industries (RIL) and Tata Motors helped the Sensex post gains for the third straight day.
Maruti Suzuki, Bajaj Auto, Axis Bank, Bharti Airtel, ONGC and Coal India were among other major gainers. The metal sector index gained the most by surging 2.70 percent to 9,541.42, followed by capital goods index by 1.35 percent to 11,893.28.
Oil and gas index rose by 1.14 percent to 9,271.21 and PSU index by 1.10 percent to 6,137.89.
The National Stock Exchange's broad-based index Nifty also closed at record high of 6,601.40 points, up by 11.65 points over the last close.