Sensex on Wednesday crossed its previous highs during the early trade on Thursday.
The S&P BSE Sensex index jumped 293.12 points to reach 40,344.99 after the US Federal Reserve slashed its interest rates for the third time this year.
The jump comes after the central government took initiatives to compete with the ongoing slowdown in the Indian economy.
The Modi-led government recently reduced corporate tax which helped several companies and yielded better than the expected results for the second quarter ending September.
Besides, global cues have also been favorable in recent times. Global markets are bullish on US-China trade talks and the Brexit issue.
The Federal Reserve on Wednesday cut interest rates for the third time this year in a move to ensure the US economy weathers a global trade war without slipping into a recession. However, it has signaled its rate-cut cycle might be at a pause.
(With input from agencies)