Heavy buying by overseas investors also continued to help underpin gains, sending the Nifty to its first weekly gain in three.
Overseas funds' net purchases of shares have reached nearly $3 billion so far this month, according to sebi data.
Investors say the RBI's policy review on April 1, where it is widely expected to keeps rates unchanged, and the coming general elections would act as the next key catalysts for markets.
The Nifty rose as much as 0.9 percent to an all-time high of 6,702.60, while the Sensex gained 0.67 percent to a lifetime high of 22,363.97.
The Sensex closed 0.57 percent higher for the day and 2.7 percent for the week, while the Nifty ended up 0.82 percent on Friday while posting a weekly gain of 3.1 percent.
PSU banks extended recent gains after the Reserve Bank of India on Thursday extended the deadline for banks to implement Basel III capital rules by a year to March 31, 2019, due to concerns from the industry on potential stress to asset quality.
State Bank of India gained 3.5 percent, Bank of Baroda rose 5.1 percent and Punjab National Bank advanced 6.4 percent.Banks have surged this month with the NSE bank sub-index up 18.5 percent on hopes of a recovery in the domestic economy, central bank's potentially easing monetary policy and broker upgrades.
Software exporters gained despite the rupee's rise to its eight-month high after global rival Accenture Plc on Thursday raised its full-year profit forecast and the lower end of its revenue forecast.
That helped bring some relief after Tata Consultancy Services Ltd and Infosys Ltd warned about their quarterly revenue growth in recent weeks.
HCL Technologies Ltd rose 1.2 percent, Infosys rose 1 percent and Tata Consultancy Services gained 0.4 percent.
Hindalco Industries gained 4.4 percent on expectations global aluminium premiums would be supported after the London Metal Exchange suffered a legal setback in its plan to free up metal more quickly from its warehouses.
Ramco Cements Ltd rose 6.7 percent after CLSA initiated coverage on the stock with a "buy" rating, saying the company will benefit from improving demand in South India.
Godrej Properties Ltd rose 5.7 percent after the company said late on Thursday that it added a new residential project in Chennai.
HDFC Bank dropped 0.2 percent after marking a record high of 760.75 rupees on Thursday.