This surpassed its previous record close of 29,974.24, reached on April 5.
Investors lost around Rs 1.57 lakh crore in market valuation on Friday.
Indian equity markets registered their highest single-day percentage gains since early October.
Reliance Industries was the top Sensex gainer up 5.6% after the company reported better-than-expected net profit growth at 12% in the second-quarter aided hby higher gross refining margins.
Sun Pharma emerged as the star performer and closed 4.03 per cent up at Rs 675.45, while Cipla rallied 1.58 per cent to Rs 592.60.
The 50-share NSE Nifty gained 53.30 points or 0.61 per cent to 8,778.
Markets snapped two-day losing streak and ended flat with a positive bias on Tuesday as gains in auto shares helped offset losses in IT majors.
Market breadth is positive with 942 advances and 196 declines.
Axis Bank emerged as the biggest gainer in the Sensex pack, surging 6.62 per cent, followed by SBI at 5.88 per cent.
All sectoral indices, led by realty, PSU, oil & gas and banking, were in positive zone with gains of up to 1.25 per cent.
The Sensex soared 402 points higher to end at 25,720 and the Nifty surged 130 points to close at 7,819.
Markets in countries whose economic fortunes were closely linked to China's growth tumbled.
Bank of Baroda ended flat after sharp gains in the previous session.
Most Asian markets were trading weak on Monday.
Experts believe that one should not allocate more than 5-10 per cent of one's equity portfolio to international funds.
Capital Goods shares ended mixed on the back of weak IIP numbers. L&T ended down 0.7% while BHEL ended with marginal gains.
The regional fallout could continue.
Experts suggest domestic factors rather than the Greece crisis would determine the course of the Indian equities.
Muted global trend after a report that US President Donald Trump was preparing to impose more tariffs on China hurt trading sentiments.
Among the gainers, Sun Pharma topped by rising 3.03 per cent as the weak rupee tempted buyers to accumulate shares of pharma exporters.
Chances of a sudden collapse in the Shanghai Composite are remote.
The breakdown of talks between Greece and its international creditors raised fears of Greece's exit from the euro zone.
Sun Pharma was the best gainer among Sensex components, surging 6.91 per cent
Fresh buying by domestic institutional investors and better-than-expected June quarter results from some blue-chip companies boosted investor sentiment
ONGC was the top performer while private banking major ICICI Bank extended gains
The broader Nifty of National Stock Exchange scaled the 10,200 mark intra day before closing at 10,184.85, showing a sizeable gain of 38.30 points, or 0.38 per cent.
The 30-share Sensex ended down 245 points at 28,799 and the 50-share Nifty closed down 81 points at 8,750
The Sensex and Nifty remained above their key levels of 36,000 and 10,900 throughout the session, indicating strong investor optimism after a prolonged spell of caution.
Bajaj Auto was the top gainer in the Sensex pack, surging 3.95 per cent followed by Maruti Suzuki at 2.69 per cent.
The 30-share Sensex ended down 604 points at 28,845 and the 50-share Nifty ended down 181 points at 8,757. The Bank Nifty ended down 602 points at 19,146.
The 30-share Sensex ended up 140 points at 28,262 and the 50-share Nifty was up 37 points at 8,551.
Infosys, TCS, HUL and Reliance Industries were the top gainers of the day.
Sensex, Nifty have lost about 6%, against 0.5-5% decline in other key Asian indices.
Investors engaged in profit booking in the recent gainers at attractive and higher valuations.
The US FOMC concludes its two-day meeting today while the Bank of Japan will start its two-day meeting today.
Sensex closed 63.82 points higher at 26,851.05 in Muhurat trading; Nifty rises 18.65 points to end at 8,014.55.
Top gainers from the Sensex pack are Asian Paints, Bajaj Auto, ITC, NTPC, L&T and HDFC, all up 2% each
The 30-share Sensex lost 54 points at end at 27,086 and 50-share Nifty shed 19 points to close at 8,096.
The Sensex ended above 27,000 for the first time while the Nifty topped 8,100.
Capital goods shares continued to trade firm in late noon despite weak market trend on the back of encouraging core sector growth in February.