``This, combined with year-end selling by foreign institutional investors(FIIs) coming in early this year, aggravated the situation and lead to thepanic-selling on the bourses during the last two days,'' says KhandwalaSecurities' VVLN Shastry.

Compared with Thursday's fall of 162 points, Friday's selling looked moresevere, as trading volumes were higher than Thursday despite a substantialfall in prices. Compared to Thursday's Rs 2,100 crore on the BSE, theturnover on Friday was Rs 3,000 crore, and owing to the slow pace ofexecution of orders on Friday, the BSE extended the trade time till 4 pm.The National Stock Exchange also extended the trading hours byhalf-an-hour.

Almost 95 per cent of the stocks in the specified list showed a sharp fallon Friday. The Sensex opened at 4601.40 points, which was the high for theday. It dipped below the 4400 level to 4368.85 points, a drop of over 235points from the previous day's close of 4594.5 points. Even such good news,which otherwise would have prompted a rally in the market, ``like waiver ofsanctions by the US failed miserably to lift the sentiment,'' said a dealerwith a domestic broking house. The S&P CNX Nifty opened at 1367.70 pointsand moved between 1370.80 and 1296.70 points, an intra-day fluctuation ofaround 74 points. The Nifty closed at 1325.45 points, a net loss of 42.25points, or 3.08 per cent over its Thursday close of 1367.70 points.

As in any falling market, rumours had their fair share on Friday too. Aromour doing the rounds in the markets was that one big broker had fallenapart with a big private-sector mutual fund chief for whom the former wasdoing the warehousing. This, in turn, resulted in the refusal of delivery ofZee Telefilms scrips by this mutual fund and the broker had to dump the Zeeshares in the market.

On Friday, Zee Telefilms lost around Rs 384 to Rs 4,418, with 5.57 lakhshares changing hands on the BSE. Over the week, Zee has lost Rs 1,422 fromits October 25 high of Rs 5,840, a fall of almost 25 per cent in just fivetrading sessions. According to a market source, along with unwinding ofpositions in the Zee counter, some other counters also faced heavy bullliquidation, which again is brewing some fears of default among the marketplayers.

Friday's fall was triggered by Infosys, which fell by nearly 4 per cent inhalf-an-hour. The selling then spread to heavyweights like ITC, Ranbaxy,SBI, MTNL, BHEL, and Reliance.

However, during the later half of the day, State Bank of India (SBI) showeda sharp recovery, which helped the Sensex recover some ground.

The index recovered and showed a close of 4444.32 points, still down by 150points from the previous day's close. SBI managed to show a gain of over 2per cent from its previous close.

NIIT also provided some help with a recovery of over 8 per cent from itslow. On the previous close, it gained 4 per cent. The position in the otherindex-based counters was far from impressive. In fact, counters likeRanbaxy, Telco, ITC, Infosys, BHEL, MTNL, and Castrol showed a fall of over5 per cent. HLL also showed a lower close.

Almost all the sectors were affected by panic-selling. The software sectorwas the main target. The selling, which started with Infosys, spread toother counters before noon. Panic was seen in counters like PentafourSoftware, Silverline, Global Tele, Himachal Futuristic, Digital Equipment,Tata Elxsi, and HCL Infosys.

Satyam remained firm during the first two hours of the day, but laterwitnessed huge selling and dipped below Rs 1,300. However, when rececoverycame, stocks like DSQ Software, Software Solution, and Mastek showed hugebuying, and showed handsome gains.

Besides software, among the specified list, panic-selling was witnessed incounters like Apollo Tyres, United Phosphorus, Gujarat Ambuja, Grasim,Castrol, LML, Tata Chemicals, Century Textiles, India Cements, RelianceCapital, Bank of Baroda, and GNFC.

Among the specified list, Sun Pharma, Novartis, Bharat Forge, NIIT, and SBIshowed a higher close. In the non-specified list, stocks like Laffans Petro,Engineers India, Veronika Lab, Krone Communication, RPG Cables, Pantaloon,Lakhanpal, Dhanalakshmi Bank, and Cynamide Agro reported handsome gains.Market players are not sure that the badla rates this Saturday would remainaround the previous week's level of 21 per cent. Given that the badla rateson the Calcutta bourse were substantially higher this Thursday, owing mainlyto funds shortage, market players here are not really feeling comfortablewith the outstanding positions.

Also, the fears about a further fall in the market might prompt some badlafinanciers to stay away from the carryforward market this Saturday. This, inconsequence, might push the badla rates towards higher levels, in the rangeof 25-30 per cent. Last two Saturdays, the badla rates on the BSE hoveredaround the 21 per cent level.