The correct answer is C — has been.
"Since morning the group of students has been excited about the forthcoming cultural fest."
"Group of students" is a collective noun treated as singular, so it takes a singular verb. "Since morning" indicates an action continuing from the past up to now, requiring the Present Perfect Continuous tense — has been (singular). Options A ("are") and D ("were") treat the subject as plural, which is incorrect. Option B ("was") is simple past and does not suit "since morning."