The index bellwether rose as much as 4.05 per cent to a fresh record high of Rs. 1,571 after its telecom wing said it will also raise tariffs of telecom offerings a day after Bharti Airtel and Vodafone Idea announced plans of raising tariffs from December.
Tata Consultancy Services, Larsen & Toubro, IndusInd Bank, Bharti Airtel, ONGC and ICICI Bank also contributed to the gain in the benchmark indices.
The Sensex rose as much as 285 points to hit a fresh record high of 40,754 and Nifty 50 index reclaimed its important psychological level of 12,000.
As of 10:08 am, the Sensex traded 261 points or 0.65 per cent higher at 40,730 and the NSE Nifty 50 index was up 68 points or 0.57 per cent at 12,008.
Eleven of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Telecom index's nearly 3 per cent gain.
Oil & Gas, Energy, Healthcare, Industrials and Capital Goods indices also rose between 1 and 2.6 per cent each.
On the flipside, S&P BSE FMCG index was top loser, down 0.6 per cent.
Mid- and small-cap shares under-performed their larger peers as the S&P BSE MidCap index rose 0.2 per cent while the S&P BSE SmallCap index was trading on a flat note.
Reliance Industries was top gainer in the Nifty 50 basket of shares. With today's surge, Reliance Industries' market capitalization has inched closer to the Rs. 10 lakh crore mark.
IndusInd Bank, Sun Pharma, Dr Reddy's Labs, Larsen & Toubro, Coal India, Bharat Petroleum and Zee Entertainment were also among the other major gainers.
On the flipside, Britannia Industries, Bharti Infratel, ITC, NTPC, Eicher Motors, Axis Bank and Nestle India were among the losers.