The BSE Sensex intra-day hit life high of 25,864.53 and settled at a new peak of 25,841.21, gaining 324.86 points, or 1.27 percent -- extending its string of gains to fourth day.
Barring Infosys and GAIL, all the components of the 30-share Sensex pack ended higher. Sesa Sterlite, Maruti Suzuki, NTPC and HDFC Bank led the 28 Sensex gainers.
The NSE's 50-issue Nifty also spurted by 90.45 points, or 1.18 percent, to end at a new closing high of 7,725.15 after hitting life-time high of 7,732.40.
In line with equity markets, the rupee rose to over two-week high of 59.65 against the dollar in the forex market.
"The participants responded positively to the statement made by the Finance Minister that the government would take bold decisions in the forthcoming Budget (July 10) to revive the economy," said Jayant Manglik, President-retail distribution, Religare Securities.
Besides, an uptick in manufacturing sector growth in June and signs of pickup in auto sales amid firming trend in the global markets too added to the optimism, he added.
Funds and retail investors created positions in capital goods, power, banking and PSU sector stocks.
Heavy buying interest from retail investors was also seen in small and mid-cap stocks. The BSE Smallcap and BSE Midcap indices closed up 1.09 percent and 0.78 percent respectively. All the 12 BSE sectoral indices, led by metal, capital goods and power, gained.
Foreign Portfolio Investors bought shares worth a net Rs 856.35 crore on Tuesday, as per provisional data.     

"If you indulge in mindless populism you burden the convert yourself into a high taxation society. It does not work. Therefore if you have to follow a path of fiscal prudence, (you should) have a certain amount of discipline," Jaitley had said on Tuesday at an event.


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