The Bombay Stock Exchange benchmark Sensex touched the 18,000-level on Monday and ended 104 points higher than its previous close.
After crossing the 18,000 points level during the day, the Sensex eased on profit-booking to close 103.66 points higher at 17,937.20, led by blue chip stocks in the realty, banking and information technology segments.
Similarly, the National Stock Exchange index Nifty hit the 5,400 points level and closed 30.55 points higher at 5,383.00.
The measure rose for the third straight day after the International Monetary Fund said India's economy may expand this year at the fastest pace since 2007.
The trading sentiment was boosted by reports that industrial production grew by 11.5 per cent in May, 2010, against 2.1 per cent in the same month last year. Expectations of higher earnings by leading companies also bolstered investors' confidence.
Market players were eyeing IT major Infosys Technologies in particular, which is likely to announce its earnings for the first quarter on Tuesday. The stock touched an all-time high of Rs 2,911.55 during the day before ending Rs 23.05 higher at Rs 2,894.95.
In the 30-BSE index, 17 counters ended higher, while 13 closed in the negative zone. The realty sector index gained the most, by 2.24 per cent, to 3,336.89, followed by the bank index by 1.34 per cent to 11,209.04. The IT index rose by 1.26 per cent to 5,546.86.
Heavy equipment and machinery manufacturer Bharat Heavy Electricals Ltd was trading higher by Rs 50.55 at Rs 2,443.30 and Larsen and Toubro by Rs 6.45 at Rs 1,825.55 as output of factories, utilities and mines rose significantly.
Idea Cellular, the third-largest mobile telecommunications company by market value, added 5.16 per cent to Rs 70.30. The stock was raised to "buy" from "sell" by Goldman Sachs Group.