Mumbai, March 1 :     Stocks surged on a wave of frenzied buying today as market operators continued to remain gung-ho over Saturday?s budget proposals. Several pivotal stocks hit the upper limit of their price bands that sent the sensex surging past the psychological mark of 3500. Operators were in raptures over the budget boosters for pharmaceutical, software and housing finance companies but the rally soon spread to other counters. Foreign institutional investors were reportedly net buyers in index heavyweights like Hindustan Lever, Larsen and Toubro, State Bank of India and Tata Tea. Domestic institutions picked up stocks like Mahanagar Telephone Nigam and Reliance. There were reports that Morgan Stanley and Capital International had bought heavily into tobacco major ITC. The BSE index opened firm at 3447.50 and fluctuated in the range of 3417.22 and 3539.62 before closing at 3523.98 points, a gain of 124.35 points or 3.66 per cent over Saturday?s close of 3399.63. Broking circles expect the bull run to gather further momentum on Wednesday when the market reopens after tomorrow?s holiday because of the Reserve Bank? announcement of cuts in the bank rate, repo rate and the cash reserve ratio for banks. Says Dilip Doshi of Classic Share & Stockbroking, ?The announcements by Reserve Bank (which were made after trading hours) will add more fuel to the rally.? They expect bank shares to join the rally which is now dominated by infotech, pharmaceutical and FMCG stocks. Among the major gainers was Hindustan Lever which once again breached the 2000 levels to close at Rs 2051.75. The technical analysts expected some profit-taking to take place today since it was the last day of trading in the current settlement at the National Stock Exchange. However, nothing could stop the operators from building long positions. The bullish fervour also gripped several B1 and B2 stocks which hit the upper circuits. The bulls took control of the market right from the start of trading and some pharmaceutical and software scrips exhausted their daily upper limit and did not provide any opportunity to FIIs to make purchases in their favourite counters at a later stage. The BSE-100 index spurted sharply by 52.78 points to 1559.73 from previous close of 1506.95. Mirroring the rise, the S&P CNX Nifty gained 34.50 to close at 1015.80. Key specified scrips like NIIT, Smithkline Pharma, Infosys, Knoll Pharma, Dr Reddy?s Labs, HDFC, Digital Equipments, Ranbaxy, Satyam Computer and Pentafour Software were among the 29 scrips that hit the upper circuit breaker. However, stocks like Bombay Dyeing, Grasim, Arvind Mills and Nocil hit the lower price band due to heavy selling pressure that were triggered by budget proposals that would hurt these industries. The bulls have taken control of the market and analysts expect the sensex to go up to the level of 3700-3800. Dealers, however, did not rule out profit-taking at higher levels with small corrections. The total volume of business on the BOLT system was put at Rs 2134.03 crore. Among top traded scrips, ITC remained in the pole position with a turnover of Rs 366.48 crore followed by Tata Tea with Rs 211.02 crore. ITC shot up by Rs 58.25 to Rs 895 and Tata Tea by Rs 7.75 to Rs 467.50 and Satyam Computers by Rs 79.25 to Rs 1072.75. Meanwhile, the rupee staged a smart rally against the dollar on renewed sales of the greenback in moderately active trading on the interbank foreign exchange market. The rupee closed at Rs.42.48/49 per dollar, sharply higher from last Wednesday?s finish of Rs.42.55/57 after posting a firm and wide opening quote of Rs 42.50/55. It traded in a fairly broad range of Rs 42.47 and Rs 42.54 as dollar sellers dominated the market. ?Heavy dollar inflows accumulated because of the two-day bank strike followed by the weekend supplies helped the rupee to stage a smart rally. Moreover, squaring of long-dollar positions built on Wednesday also boosted the rupee,? a forex dealer said.