The 50-share index soared by a hefty 75.45 points, or 0.90 per cent, to end at 8,477.35, a fresh historic peak, after hitting a high of 8,489.80 on the National Stock Exchange (NSE).
Strong buying, predominantly in the banking space, after Kotak Mahindra Bank announced a jumbo merger deal with ING Vysya Bank, revved up the market.
Hopes of big-bang reforms in Winter Session of Parliament, beginning next week, also spurred sentiments.
FMCG, energy, auto and infra stocks saw furious buying activity. Ignoring the positive trend, technology and healthcare counters dropped on heavy profit-taking.
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After a soft opening, the market quickly regained its strong momentum and stayed in the green throughout the day before concluding the week on a high note.
Other major Asian markets also finished higher, rebounding from recent sharp fall as sentiment turned positive on record gain by US stocks.
Other big movers were ITC, Reliance, HDFC, L&T, Tata Motors, TCS, M&M, Hindalco, BHEL, Cipla, Bharti Airtel, Hero, and Sesa Sterlite.
Major losers included Infosys, Sun Pharma, HUL, ONGC, Tech Mahindra and Tata Steel.
Turnover in the cash segment jumped to Rs 17,243.50 crore from Rs 15,533.13 crore yesterday. A total of 8,255.77 lakh shares changed hands in 71,21,405 trades, while market capitalisation stood at Rs 96,61,687 crore.