The benchmark BSE Sensex ended higher by nearly 99 points at 28,008.90 on sustained buying by foreign funds and retail investors despite weak global cues.
Similarly, the NSE index Nifty ended higher by 20.65 points at 8,383.30.
Among BSE sectoral indices, auto and banking indices were the star-performers and were up 1.18 per cent and 1.12 per cent, respectively. On the other hand, power index fell the most by 1.37 per cent, followed by metal 0.9 per cent, PSU 0.57 per cent and capital goods 0.53 per cent.
Axis Bank, Bajaj Auto, Tata Motors, Hero MotoCorp and ITC were the top five Sensex gainers, while the top five losers were Cipla, Tata Power, Tata Steel, NTPC and L&T.
The benchmark BSE Sensex surged 203.97 points or 0.73 per cent to trade at a new record-high of 28,114.03 in the morning session, breaking its previous peak of 28,027.96 reached on November 10.
Similarly, the NSE Nifty crossed the 8,400-mark for the first time in late morning trade and hit a new life-time high of 8,407.35, led by a rally in auto, banking and infrastructure stocks on sustained inflow of foreign capital.
The 50-share NSE index crossed the 8,400-level for the first time by gaining 44.70 points or 0.53 per cent to trade at a life-time high of 8,407.35, surpassing its previous intra-day high of 8,383.05 touched on November 10.
Brokers said that the domestic sentiment remained upbeat on continued buying by foreign funds and retail investors amid a series of economic reforms undertaken by the Narendra Modi-led government and strong earnings by blue-chip companies.
Besides, expectations of encouraging inflation data for October and IIP numbers for September also buoyed the trading sentiment, they added.
A report by Equentis Capital said: "We expect markets likely to remain positive. Stay cautious and book profits on higher levels. The government will unveil IIP data for September 2014 and annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India for October 2014 on 12 November 2014. Inflation data based on wholesale price index (WPI) for October 2014 will be released on 14 November 2014. Slower inflation could support regulators (RBI) to increase liquidity in the market in short-term and positive action by the regulators will be good for interest sensitive sectors/stocks."
European stocks
European shares and core bond yields fell on Wednesday, bucking a strong performance in Japan, with bank stocks under pressure following a landmark $3.4-billion settlement over allegations of price-fixing in currency markets.
The pan-European FTSEurofirst 300 equity index was down 0.6 per cent at 0852 GMT, while the STOXX Europe 600 banks index was down more than 1 per cent.
Regulators imposed penalties totalling $3.4 billion on UBS , Citigroup, HSBC, Royal Bank of Scotland and JP Morgan.
Asian shares
Asian stocks extended their gains for the fourth day as Japanese shares climbed after the yen depreciated to a seven-year low amid speculation the nation will delay raising its sales tax again.
Japanese stocks scaled seven-year highs on Wednesday on growing expectations Prime Minister Shinzo Abe will postpone a planned sales tax hike to avoid damaging a fragile recovery, and call a snap election to bolster his political standing.
Nikkei 225 rose 73 points or 0.43 per cent at 17,197 and Hang Seng jumped 184.08 points or 0.77 per cent at 23,992.36.