The bull operator is believed to have turned a bear to cut his losses as the markets fell sharply on the last day of the settlement in the wake of heavy FII and bear hammering.

Despite the Bombay Stock Exchange (BSE) completing the pay-out of the settlement ended February 23, the market is still in the grip of fears of a payment crisis for the settlement which ended on Friday on BSE, the pay-in for which will be carried out on Wednesday, March 7. The BSE has also called for the books of account of the bull operator to check for possible hammering of stocks.

Sebi is also believed to be looking at the possibility of imposing specific steps on Monday morning to contain the slide in the market, which has driven furrows into the collective brow of finance ministry mandarins. Even as the probe got under way and the rumours flew thick and fast, the BSE on Saturday slapped additional margins ranging between 10% to 25% on 39 stocks, 10 of which are `A' group. These included HFCL, Global Tele, Pentamedia, Silverline and Zee .

Speaking to The Financial Express, Mr LK Singhvi, senior executive director, Sebi, who is in charge of the probe, said: ``We are investigating the nexus between top broking firms and whether there was any intentional selling to manipulate the markets.'' Mr Singhvi said the markets regulator was in close touch with the BSE and the NSE to examine the trading data of the firms alleged to be involved in the bear hammering on Friday.

Mr Singhvi said there was huge volatility from Budget day onwards, and the probe would look into exactly what was the reason for the enormous swings in the market. On Budget day, the market rose a huge 177 points, followed by huge gyrations the next day when major gains were wiped out during the course of the trade, and the Sensex ended with a 25-point gain. However, the final blow came on Friday, when all the gains after the Budget were wiped out with a 176-point selloff. The probe is expected to look into how the wave of selling was carried out, and, more importantly, on whose behalf such sales were being undertaken. According to sources, most of the broking firms being mentioned as involved parties in the bear hammering were carrying out deals for the ``tech'' bull who had been dumping tech stocks to cut losses. The name of a private bank which was in the news recently has also been thrown up , since the link is that the bank also sold tech stocks to recover dues from the bull whose cheque to the bankis said to have bounced.