The 30-share barometer, which has gained nearly 710 points in the previous seven sessions, shot up further by 406.45 points, or 2.26 per cent, to 18,427.61.
All sectoral indices, led by banking, metals and oil and gas, were trading in the positive zone with gains of up to 3.36 per cent.
Similarly, the wide-based National Stock Exchange index Nifty regained psychological 5,500 points level by climbing 118.15 points, or 2.17 per cent, at 5,553.50.
Market experts said the rise in domestic market is in line with a firm trend overseas after the Federal Reserve unveiled a fresh stimulus plan to help spur the US economy, triggering widespread buying activity.
Stocks of oil companies were back in demand after the government hiked diesel prices by Rs 5 per litre yesterday, which would reduce the subsidy burden, brokers said.
In Asia, Japan's Nikkei was up 1.54 per cent, while Hong Kong's Hang Seng index gained 2.28 per cent in early trade today.
The US Dow Jones Industrial Average had ended 1.55 per cent higher in yesterday's trade.