Mumbai: The Sensex went up 205 points to end at 32,515 and the Nifty 63 points at 10,077 -- both record closings -- powered by better-than-expected corporate earnings amid expectations of an interest rate cut by the Reserve Bank.
The rally mirrored strength in most Asian indices.
European shares ruled high too despite lower-than-expected US economic growth numbers and renewed tension over North Korea's missile programme.
The 30-share Sensex settled at the new high of 32,514.94, up 205.06 points, or 0.63 per cent. This has breached the previous closing record of 32,383.30 hit on July 27.
The gauge had lost 73.42 points in the previous session on Friday.
The 50-issue NSE Nifty hit an all-time high during the day. It settled up 62.60 points, or 0.63 per cent, at a fresh life high of 10,077.10, breaking its previous record of 10,020.65 recorded on July 26.
Shares of Country's largest lender, State Bank of India, was the top gainer by climbing 4.46 per cent after it slashed interest rate on savings account deposits by 50 bps to 3.5 per cent on balance of up to Rs 1 crore.
The RBI is expected to cut interest rate at its policy meet on Wednesday as inflation dropped to record low. Earnings optimism also helped.