The Sensex resumed 14 points higher over its last close at 6,584 and moved in a narrow (positive) range during the budget announcement, before slipping into the red to touch a low of 6,546 in early noon trades.
The markets, however, staged a smart recovery immediately after the budget announcement as fresh buying emerged in most of the counters.
The late noon trades witnessed a steep rally as across-the-board buying support saw the index zoom past the 6,700-mark to touch its all-time of 6,721.
The Sensex, after exhibiting extreme volatility during the intra-day trades, finally wrapped up the session with an all-time closing high of 144 points at 6,714.
The Nifty, too, firmed up on all-round buying support and moved up 38 points to 2,099.
While 25 Sensex stocks advanced, four declined and one stocks ended unchanged. Advancing stocks accounted for a volume of 2.12 crore amounting to Rs 1,164.68 crore, and declining shares registered a volume of 19 lakh for Rs 86.36 crore.
Reliance advanced nearly 3% (Rs 16) to Rs 556. HLL gained 2.49% (Rs 3) to Rs 144, while ITC clocked a per cent gain (Rs 7) to Rs 1,295.
SBI flared up 4.25% (Rs 29) to Rs 714. While HDFC Bank jumped 2.79% (Rs 16) to Rs 585, ICICI Bank moved up 3.68% (Rs 13) to Rs 381.
Infosys soared 2.62% (Rs 57) to Rs 2,237. While Wipro notched up 3.66% gains (Rs 25) to Rs 699, Satyam climbed 2.67% (Rs 11) to Rs 411.
ONGC, after a weak opening, added 1.12% (Rs 9) to Rs 852, while HPCL came off-highs to close 2.15% higher (Rs 7) at Rs 351.
Gujarat Ambuja surged nearly 4% (Rs 17) to Rs 451. While Grasim addded 2% (Rs 27) to Rs 1,346, ACC moved up 1.72% (Rs 6) to Rs 367.
Hero Honda shot up 4.56% (Rs 24) to Rs 544. While Bajaj added 1.69% (Rs 17) to Rs 1,037, Tata Motors ended with a per cent gain (Rs 5) at Rs 475. Maruti, however, was down a rupee at Rs 473.
HDFC at Rs 777 (up Rs 20 or 2.68%), Reliance Energy at Rs 565 (up Rs 13 or 2.44%), Tisco at Rs 422 (up Rs 13 or 3%), Bharti at Rs 225 (up Rs 5 or 2.39%) and Tata Power at Rs 406 (up Rs 5 or 1.325) also ended firm on sustained buying support.
BHEL, however, ended a per cent lower (Rs 6) at Rs 856, while Zee shed 1.77% (Rs 3) to Rs 142.
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