The Sensex skyrocketed 873 points to a fresh closing peak while the Nifty finished above the 16,000-mark for the first time on Tuesday as economic recovery hopes triggered across-the-board buying.

Investors grew richer by Rs 2.30 lakh crore, with a market capitalisation of all BSE-listed reaching a lifetime high of Rs 2,40,04,664.28 crore.

Rising for the second straight session, the 30-share BSE benchmark Sensex ended 872.73 points or 1.65 per cent higher at its fresh closing record of 53,823.36.

Similarly, the broader NSE Nifty rallied 245.60 points or 1.55 per cent to an all-time peak of 16,130.75.

Titan was the top gainer in the Sensex pack, spurting 3.89 per cent, followed by HDFC, Nestle India, IndusInd Bank, UltraTech Cement, Bharti Airtel and SBI.

Only three index components finished in the red -- Bajaj Auto, Tata Steel and NTPC, shedding up to 0.33 per cent.

"Bulls pulled off the 16,000 marks on the Nifty effortlessly buoyed by positive news flow on GST and export data as domestic fund houses poured Rs 280 billion during the first four months of the current fiscal," said S Ranganathan, Head of Research at LKP Securities.

The country's exports grew 47.19 per cent to the "highest ever monthly figure" of $35.17 billion in July on account of healthy growth in petroleum, engineering, and gems and jewellery segments, as per official data released post market hours on Monday. The journey past 16,000 quite clearly has been led by the retail investors who have allocated more into equities even as FIIs sold worth Rs 95 billion during this period, he noted.

"The present rally is all the more significant since it provides enough opportunities to the new investor coming in now as several pockets of the economy still offer value going forward," he added.

Binod Modi, Head - Strategy at Reliance Securities, said key economic indicators like GST collection, auto sales volume, and other high frequency indicators like e-way bills indicate a strong rebound in July, which indicates sustained healthy corporate earnings in subsequent quarters.

"Barring financials, June quarter earnings so far have been encouraging and most companies succeeded to beat consensus estimates, which offered comfort and aided to restrict sharp fall despite selling pressure in global equities," he added.

Sector-wise, BSE telecom, FMCG, auto, bankex, finance and teck indices rose up to 1.70 per cent, while metal closed with losses.

Broader BSE midcap and smallcap indices advanced up to 0.23 per cent.

"Markets touching all-time highs are a combination of various factors including global liquidity, decent operational performance, multiple sectors, and various government support schemes. However one should not get carried away by the buoyancy in the markets as some signs of stress are visible too,” said Ronak Gala, Fund Manager, AlphaQuest by Tarrakki.

Most notable among them are the high provisions done by most banks in Q1FY22. So a sensible strategy is to focus on segments in the markets which are facing genuine tailwinds and are still available at reasonable prices, Gala added.

Asian markets tumbled after China's regulatory crackdown seemed to be heading towards online gaming giants, while European equities were propped up by strong corporate results.

In Asia, bourses in Shanghai, Tokyo, and Hong Kong ended with losses, while Seoul was positive.

Stock exchanges in Europe were trading with gains in mid-session deals.

Meanwhile, international oil benchmark Brent crude advanced 0.47 per cent to $73.23 per barrel.

The rupee rose by 6 paise to close at 74.28 against the US dollar on Tuesday amid a weak American currency overseas.

Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 1,539.88 crore, as per exchange data.