Extending gains for the sixth day in a row, the 30-share index, added another 164.40 points, or 0.98 per cent, to 16,883.27 with all the sectoral indices, led by metal trading in positive zone with gains of up to 1.71 per cent.
Sensex has gained 754 points in the previous five sessions.
The wide-based National Stock Exchange index Nifty moved up by 47.05 points, or 0.93 per cent, to 5,115.40.
Brokers said fresh buying by funds and retail investors, following recovery in the rupee against the American currency and a firming trend on Asian bourses boosted the trading sentiment here.
Asian shares today rose after finance ministers of the euro-zone nations, in a emergency conference call last week, agreed to lend Spain up to 100 billion euros to stabilise its banks, relieving markets that had feared for the country's fiscal collapse.
The rupee was trading 32 paise higher at Rs 55.10 against the US dollar in early trade.
In the Asian region, Hong Kong's Hang Seng Index rose by 2.03 per cent and Japan's Nikkei Index up by 1.86 per cent in morning trade.