Dealers said buying sentiment improved on sustained interest in capital goods, engineering and software stocks against a backdrop of fast-paced economic growth in the South Asian economy.

The benchmark Sensex rose as much as 145.33 points or 0.97 percent to a new intraday record of 15,007.22 before closing at 14,964.12, up 102.23 points or 0.69 percent.

Dealers said the market's buoyancy was due in part to strong earnings data and lower inflation, which has eased interest rate hike concerns.

"We expect the markets to remain strong over the short term, probably ending the year higher than they are now," said Andrew Holland, the managing director of DSP Merrill Lynch.

"There is also a catch-up factor with global markets," he said, noting that some global markets had hit new highs in recent times.