NSE Nifty finished higher by 46.05 points, or 0.39 per cent, at 11,707.90.
Asian Paints was the top gainer in the Sensex pack, rallying 6.32 per cent, followed by Nestle India, HUL, Bajaj Auto, IndusInd Bank, Tata Steel, Maruti and PowerGrid.
Equities benchmark BSE Sensex ended 137 points higher on Monday led by gains in HUL, ICICI Bank and Asian Paints amid broad-based buying in the market.
After a volatile session, the 30-share BSE Sensex settled 136.78 points, or 0.34 per cent, higher at 39,872.31.
It hit an intra-day high of 40,014.90 and a low of 39,563.07.
The broader NSE Nifty finished higher by 46.05 points, or 0.39 per cent, at 11,707.90.
Asian Paints was the top gainer in the Sensex pack, rallying 6.32 per cent, followed by Nestle India, HUL, Bajaj Auto, IndusInd Bank, Tata Steel, Maruti and PowerGrid.
On the other hand, ITC cracked 5.09 per cent. TCS, HCL Tech, Hero MotoCorp and Tech Mahindra too ended in the red.
Indian markets traded volatile in the first session of the week with investors assessing the implications from budget, overnight gains in the US index futures and a sell-off in China, said Narendra Solanki, head fundamental research (investment services) - AVP Equity Research, Anand Rathi Shares & Stock Brokers.
Markets turned positive in the afternoon session after a monthly survey said the country's manufacturing sector activity climbed to a near eight-year high in January, he said.
The IHS Markit India Manufacturing PMI rose from 52.7 in December to 55.3 in January, driven by sharp rise in new business orders amid a rebound in demand conditions that led to rise in production and hiring activity.
"With budget behind, traders now shifts focus back to the quarterly earnings season and the central bank's interest rate decision later this week," he added.
Meanwhile, bourses in Shanghai plunged nearly 8 per cent as markets opened after an extended Lunar New Year break.
Japan and South Korea ended in the red, while Hong Kong settled with gains.
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