Software, Pharma and FMCG stocks led the rally with most frontline stocks in these sectors hitting the upper price band on sustained buying by speculators, domestic and foreign funds. Housing finance companies, entertainment and telecom equipment stocks joined the rally after the finance minister singled them out for major incentives.

The rally was, however, not without hiccups. After going up by over 100 points in the morning, the Sensex crashed to its low of 3,215.69 points on panic selling immediately after the finance minister announced the 10 per cent surcharge on corporate profits. But the market rebounded immediately with solid buying support emerging in pharma, housing and software counters.

Brokers and tradersexpressed confidence that the current rally will easily push Sensex to 3,600 mark, though they have not been as confident about the sustainability of the rally beyond that point. "With the Sensex represented heavily by HLL, ITC, Glaxo, Novartis, NIIT and Infosys, the 3,600 mark looks easily achievable," Birla Marlin Securities' K Ramachandran said. However about the sustainability of the rally he said, "It is a difficult call. The rally is purely on software, pharma and FMCG. So whatever money that comes will go directly to these sectors. There is not yet any broad movement in the market."

The pre-budget favourite IPCL and Tisco along with most commodity stocks took the beating and closed below their previous close. Reliance managed to hold on to its pre-budget gains with some late support from operators and closed 2.78 per cent higher at Rs 144.20 after going below Rs 136 in mid-session. The stock registered a phenomenal volume of over 3.5 crore shares on the local bourses.

Bourses recorded large volumeswith BSE turnover crossing Rs 2,000 crore figure with a turnover of Rs 2,032 crore and NSE posting a turnover of over Rs 3,000 crore. NSE posted a record number of four lakh trades in the post budget session.

"The markets could be on fire and jump start a sharp rise. The incentives provided to the construction industry is bound to benefits companies such as ACC, Gujarat Ambuja, Larsen, Grasim and Revathi CP. Similarly, the export tax concession to the entertainment and music industry would benefit Zee Telefilms and Sri Adhikari Brothers," Malini Sanghvi Securities' director Ajit Sanghvi.

Frenzied buying in the software stocks saw only buy orders in most software counters by 2.00 pm. NIIT, Pentafour software, Satyam, Aptech, BFL, Cybertech, CMC, Digital Equipments, Rolta, Silverline, Mastek, PSI Data, Sierra Optima, DSQ Software, Tata Elexi and Leading Edge were stuck at the upper price band for most of the day with no sellers.

Similar was the case with pharmaceutical stocks with Parke Davis, Abbot Labs,Knoll Lab, Rhone Poulenc, Glaxo, Novartis, German Remedies, Ranbaxy, Wyeth Lab, Pfizer, Hoechst, Burroughs Wellcome, E Merck and Fullford hitting the upper price band. Among the FMCG stocks, HLL, Britannia, Reckitt & Colman and Nestle made impressive gains. Almost all the housing finance stocks hit the upper band namely HDFC which was locked at Rs 2,482.95 and LIC Housing Finance at Rs 40.30.

Even small cap housing finance companies like CanFin Homes and Dewan Housing registered huge gains to the tune of 18.46 per cent and 16.9 per cent respectively. "3600 levels of Sensex looks quite achievable. A lot of build up is there based on belief that foreign funds will be entering the market in a major way on Monday. They have been mostly absent today because of Holiday abroad," KJMC Financials Purvesh Shah said.

"The rally looks very much sustainable in the near future. I think it should later stabilise to around 3,400 levels," broker Alok Churiwala said. A few India dedicated foreign funds and domestic fundswere active participants on Saturday. But more fund buying is expected to emerge on Monday, say brokers.

PSU representatives however continued to face huge bouts of liquidation as brokers were unclear of the government's plan for disinvestment expect the target of mopping up Rs 10,000 crore.