The Sensex, which had gained 386 points in last five trading sessions, opened lower but picked up pace to close 85.03 points, or 0.45 per cent, higher at 18,902.41. This level is closer to 18,938.46 points on October 5, 2012.
Brokers said investors and Indian industry cheered the re-election of US President Barack Obama, raising hopes that his continuity will be good for bilateral relations and global economic growth.
The broad-based National Stock Exchange index Nifty advanced 35.70 points, or 0.62 per cent to close at 5,760.10.
"Markets surged to over five-week highs... However, index was off its day's high in the last part of the day due to profit-booking. Post US-elections, focus shall continue to be on second quarter results as well as reforms actions," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.
Traders said sentiment was further bolstered as Finance Minister P Chidambaram expressed the hope that economic ties with the US would improve with Obama's re-election.
The rise was on the back of stocks from realty and banking on expectations of good loan demand in the festival season.
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Information technology stocks, including Infosys and TCS, also closed with gains. The Indian software companies get over 50 per cent revenue from the US and European markets.
However, Bharti Airtel shares ended nearly 1 per cent lower after reporting 11th consecutive quarter of profit dip.
The BSE realty sector index gained 2.76 per cent -- the most among sectoral indices. It was followed by the BSE banking index (1.07 per cent) as SBI climbed 1.91 per cent.
With reports trickling in about the outcome of US Presidential polls, Asian stocks ended in positive zone. European markets also opened higher.