The Sensex and Nifty ended at record closing highs for the third consecutive session as optimism rose ahead of Narendra Modi government's last full year Budget on February 1. The indexes also gained ground amid optimism over Q3 earnings due to favourable effect of a low base an year ago. Tata Consultancy Services is due to post December-quarter results on Thursday, followed by Infosys on Friday.
While the Sensex closed 90.40 points or 0.26% higher to 34,443 level, breaching its previous closing level of 34,352.79, Nifty settled at 10,637, a rise of 13 points from its previous record close of 10,623 level.
Earlier, the Sensex hit an all-time high of 34,488 level intra day. Nifty too touched lifetime high of 10,659 in trade today.
BSE realty index rose 2.9 percent, consumer durables index added 0.8 percent, IPO and energy indexes gain 0.15-0.2 percent; IT index was up 0.3 percent.
Coal India (5.63%), YES Bank (2.31%) and Wipro (2.11%) are the top Sensex gainers.
Bharti Airtel (1.18%), Adani Ports (1.13%) and Hero MotoCorp (0.91%) are top losers on Sensex.
Coal India rose up to 7.69% after the state run miner said its board has approved a hike in non-coking coal prices for both power and non-power consumers with immediate effect.
"Markets are flattish as there is some volatility due to expectations around budget, corporate results which are starting soon and the global markets," said Vinod Nair, Head of Research at Geojit Financial Services.
Coffee Day Enterprises, the Cafe Coffee Day chain owner was locked in the upper circuit of 20% or 54.10 points to 324.65 level.
Market breadth is negative with 1369 stocks closing higher against 1623 enidng lower on BSE. 102 stocks were unchanged.
S&P BSE consumer durables index was the top gainer among the 19 sectoral indexes rising 193 points to 24,053 level. PC jeweller (6%) and VIP Industries (4.17%) were the top gainers on the index.
The BSE auto index was the top loser with Cummins India (2.14%) and Eicher Motors (1.84%) falling most on the index.
Meanwhile, iron ore miner NMDC closed 4.48 percent lower to Rs 154.60 after the government unveiled a plan to sell up to 47.5 million shares in the company.
MSCI's all-country world stocks index posted another record high as Europe's main markets shrugged off a tech wobble in Asia and instead cheered Christmas trading updates and more forecast-beating data from Germany.
Asian trading saw Japan's Nikkei close at its highest since November 1991, catching up to the previous session's gains as markets reopened after a holiday on Monday.
South Korea's share market erased its gains and slipped 0.1 percent, dragged lower by a 3.1 percent drop in shares of Samsung Electronics Co.