Mumbai, Jan 29 (IANS): Indian equity markets rose sharply on Monday on the back of great expectations from the upcoming interim budget (Feb 1) and strong cue from other Asian markets, said Manish Jain, Head of Fund Management at Centrum.

While Sensex ended the day 1,240.90 points or 1.76 per cent higher at 71,941.57, Nifty closed 385 points or 1.8 per cent higher at 21,737.60.

Private sector banks in particular drove the market rally as DII's continue value picking at current levels.

"We believe that the volatility will continue in the coming days as the results season unfolds. The market will also be keenly looking at the upcoming US Fed meet to see any change in body language, inflation expectations and rate cut cues," Jain said.

The domestic market underwent an upturn as the recent selloff and positive Asian peers provided an opportunity to accumulate quality stocks, said Vinod Nair, Head of Research at Geojit Financial Services.

Despite premium valuations, confidence is upheld among the investors due to the optimistic environment surrounding the interim budget and recent set of results aligning with forecasts, he said.

Globally, the upcoming Fed policy stands out as a crucial factor. While a rate cut by the FOMC is unlikely, investors will eagerly monitor their commentary to get cues on future rate paths, Nair said.

Rupak De, Senior Technical Analyst at LKP Securities, said Nifty has surged above the dual resistances of 21,500 and 21,700. It successfully reclaimed the 20-day moving average after a few days of struggle.

Furthermore, the recent upward movement has propelled the index above the critical moving average, indicating a positive trend for the short term. On the higher end, it is poised to potentially reach levels around 22,100-22,150. The support level is positioned at 21,550.