Mumbai: Bolstered by receding war fears, the SENSEX opened sharply higher and improved further at early stages in line with a smart rally in equities on the Bombay Stock Exchange (BSE) on February 17 on hectic buying support.

Investors responded positively, making fresh commitments as fears of US-led war against Iraq receded following reports that UN weapons inspectors have not found any weapons of mass destruction in Iraq.

The BSE sensitive index opened sharply up at 3,248.90 as against February 14 close of 3,223.41 and later rallied smartly to a high of 3,275.24 before being quoted at 3,271.16 at 10.30 am (IST).

Speculators and retail investors stepped up purchases also on expectations of market- friendly Budget to be presented at the end of the month.

Investors have turned optimistic about favourable budget proposals following reports that Finance Minister Jaswant Singh is likely to abolish dividend tax and surcharge on corporate tax in the forthcoming Budget.

A strong rally in global markets as result of receding war fears also had a sentimental impact on the Indian bourses.

The Dow Jones industrial average was up by 158.93 points and the NASDAQ composite index by 32.73 points on February 14.

PTI