The BSE benchmark index resumed higher at 17,916.13 and shot up further to a day's high of 18,012.89, before ending at 18,000.03 on buying in metal, auto and capital goods shares. This is a gain of 147.08 points, or 0.82 per cent, over yesterday. Sensex last closed above 18,000 on February 23.
Likewise, the broad-based National Stock Exchange index Nifty closed 41 points, or 0.76 per cent higher at 5,431.
IIP growth rate slowed to 0.1 per cent cent in July due to poor show by manufacturing, mining and capital goods, fuelling hopes that RBI will act in its Monday policy meeting.
"July industrial growth came in line with our muted expectations. With growth set to slow below the RBI's 6.5 per cent forecast, we expect a 0.25 per cent CRR cut on Monday to soften lending rates," said Indranil Sengupta, India Economist, Bank of America Merrill Lynch.
As many as 21 stocks in Sensex closed with gains. Tata Motors which rose 5.3 per cent led the winners, followed by Jindal Steel (3.8 pc), Coal India (2.9 pc) and L&T (2.8 pc).
11 out of sectoral indices ended higher today with 1,575 stocks finishing with gains while 1,308 shares lost value.
Brokers said domestic market received a further boost as Asian and European shares jumped after Germany's top constitutional court allowed the country to ratify the euro-area bailout fund with certain conditions.
"German court's ruling today, affirming the implementation of Eurozone's new rescue fund and budget pact, also helped the market sentiment," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.
Asian benchmark indices in China, Indonesia, Singapore, Japan, Taiwan, South Korea and Hong Kong ended higher by 0.28 per cent to 1.73 per cent. European stock markets also turned positive in the early trade today.
Key benchmark indices in France, UK and Germany were up by between 0.20 per cent to 0.89 per cent.
Back home, out of the 30-share sensex pack, 21 stocks finished with gains while nine ended with losses.
Other gainers from the Sensex were Tata Steel (2.68 pc), Wipro (2.48 pc), Dr Reddy (2.38 pc), Hindustan Unilever (1.52 pc), TCS (1.50 pc), Sterlite (1.38 pc), HDFC Bank (1.02 pc) and ITC (0.94 pc).
Among losers, Cipla dropped by 2.73 per cent, followed by NTPC (2.18 pc), Gail India (1.66 pc), BHEL (1.64 pc) and Hero Motocorp (0.92 pc).
Among the sectoral indices, the BSE-Metal rose by 2.14 per cent, followed by the BSE-Auto (1.26 pc), the BSE-Capital Goods (1.20 pc), the BSE-IT (0.95 pc), the BSE-Consumer Durable (0.81 pc) and the BSE-Realty (0.81 pc).
The BSE-Power and the BSE-Healthcare, however, declined by 0.98 per cent and 0.43 per cent respectively.
The total turnover shot up to Rs 2,412.85 crore from Rs 1,787.78 crore yesterday.
Foreign Institutional Investors (FIIs) bought shares worth a net Rs 423.59 crore yesterday as per the provisional figures from the stock exchanges.