After rallying nearly 300 points to its record intra-day high of 41,899.63, the 30-share BSE Sensex settled 259.97 points, or 0.62 per cent, up at its new closing peak of 41,859.69.
Likewise, the broader Nifty scaled its lifetime (intra-day) high of 12,337.75, before ending 72.75 points, or 0.59 per cent, higher at 12,329.55 -- its fresh closing record.
Infosys was the top gainer in the Sensex pack, spurting 4.76 per cent, after the IT services major on Friday reported a 23.7 per cent rise in consolidated net profit at Rs 4,466 crore for the December quarter.
IndusInd Bank, Bharti Airtel, HUL, M&M, Tata Steel, PowerGrid and Tech Mahindra too ended with gains of up to 3.34 per cent.
On the other hand, TCS, SBI, Bajaj Auto, ICICI Bank, RIL, Axis Bank and Nestle India shed up to 1.03 per cent.
According to traders, besides positive quarterly numbers from Infosys, upbeat domestic macroeconomic data and firm global cues boosted sentiment here.
After contracting for three months in a row, the Index of Industrial Production (IIP) recorded a growth of 1.8 per cent in November, mainly on account of improvement in the manufacturing sector, as per government data released after market hours on Friday.
Global equities moved higher as investors looked forward to the long-awaited phase one trade deal between the US and China scheduled to be signed this week.
"Indian markets continued to make new highs on the back of geopolitical stability globally. The earnings season kicked off on a healthy note fuelling to the market rally. While in the current earning season, the topline growth is not expected to be stellar, the PAT growth is expected to be very strong, driven by high margins and benefits of tax rate cut.
"Earnings appear to have bottomed out and we should witness strong growth in coming year as the economy revives on a low base," said Hemang Kapasi, Portfolio Manager - Equity Investment Products, Sanctum Wealth Management.
All BSE sectoral indices closed in the green, led by realty, IT, teck, telecom, utilities, metal and power that rose up to 2.12 per cent.
The broader BSE midcap and smallcap indices climbed up to 0.95 per cent.
Bourses in Shanghai, Hong Kong and Seoul ended significantly higher, while European markets started on a positive note.
Brent crude oil futures rose 0.37 per cent to USD 65.22 per barrel.
The rupee appreciated 12 paise to 70.82 per US dollar (intra-day).