In addition, covering up of short positions by speculators ahead of Thursday's monthly expiry in the derivatives segment also helped Sensex rebound, brokers said.

After opening in the negative zone at 26,349.87, the Sensex slipped further to touch the day's low of 26,314.89 on sustained selling due to negative domestic and overseas cues.

However, late buying helped it wipe off initial losses to gain 5.79 points, or 0.02 percent. It close at new high of 26,442.81, breaching earlier record of 26,437.02 reached on Monday. The gauge has gained over 128 points in 4 days.

However, NSE Nifty index retreated from fresh record high hit on Tuesday and edged lower by 1.55 points, or 0.02 percent, to close at 7,904.75 as banking stocks fell. The barometer moved between 7,862.45 and 7,915.45 during the session on alternate bouts of selling and buying.

Sentiments remained bearish at the outset following the Supreme Court's coal block allocation judgement. However, metal space saw value-buying as Tata Steel, Hindalco and Sesa Sterlite recovered.

However, SBI, ICICI Bank, HDFC Bank shares were under some pressure on worries due to metal sector exposure.

Among pharmaceutical stocks Sun Pharma, Dr Reddy and Cipla were major gainers. FMCG majors ITC and HUL rose on rush for defensive sectors, traders said.

Stocks of Maruti and some others ended lower after CCI slapped a Rs 2,545 crore fine on 14 car makers for violating trade norms in spare parts and after services market.

Sectorally, the BSE Healthcare index rose the most 1.12 percent, the best among peers. It was followed by the FMCG sector index that rose by 0.90 per cent, Metal index by 0.75 percent and Consumer Durables index by 0.33 percent.

Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 127.33 crore on Monday.

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