With fears of another payment crisis on the lines of the Kolkata crisis still prevailing in the market, technology stocks were hammered down sharply with the index heavyweights Infosys, NIIT and Satyam Computer bearing the brunt.

In a falling market, there was a sharp drop in volumes on the stock exchanges following the fresh measures announced by Sebi. The market regulator had increased the additional margins from 10 per cent to 25 per cent and had also reduced the brokers exposure limit to Rs 50 crore per day, except for NSE and BSE.

The turnover on both the exchanges was down sharply as a consequence. At the NSE, it fell from Rs 2,306 crore on Friday to Rs 1,946 crore on Monday, while on the BSE, turnover dropped from Rs 1,867 crore to Rs 1,409 crore.

Brokers said the decline in volumes was a clear consequence of the reduction in the gross exposure limits of the brokers. The market opened weak in the morning and in the first hour the benchmark index crossed the 3,900 mark due to buying interest in select stocks. However, heavy sales both from FIIs and domestic institutions led to panic selling in the last 90 minutes of trading with the Sensex closing below the 3,800 mark at 3,767.89, a fall of 114 points (or 2.94 per cent). But at the NSE, the fall was much more than at the BSE. The S&P CNX Nifty dropped by 56.8 points (4.52 per cent) to close at 1,197.95.

Dealers said the fall in Nasdaq on Friday and possibility of more profit warnings by some of the leading software companies led FIIs to offload technology stocks. Among the technology stocks - Wipro, Digital, HCL Infosystems, SSI, NIIT - all of them hit the 16 per cent lower circuit, the maximum level a stock can fall in a day.

For the third day in a row, NIIT hit the 16 per cent lower circuit, after the company announced a profit warning on Wednesday.

The other index heavyweight Satyam Computer fell by 10.4 per cent to close at Rs 212.80 and Infosys was down by 9.32 per cent and closed at Rs 4,452.

HFCL's fall continued and the stock hit another 16 per cent lower circuit and closed at Rs 274.65.

These stocks are being continously being hammered as some of the banks having them as collateral are selling them to recover their dues from the market. In addition, there were also rumours that Calcutta Stock Exchange (CSE) had sold some shares - kept as deposits by brokers - in the market, to recover the amounts due from some brokers.

Dealers said the sharp fall in the last 90 minutes of trading was partly due to this. Even when there was across the board selling, UTI is believed to have bought some small quantities of NIIT, Zee and Infosys."The market seems to be bottoming out and from this level, it should move up," said a dealer.