As a result, in spite of some good news on the disinvestment front, bourses ended with losses for the third consecutive session, reaching its seven-week lower level.
The BSE-30 Sensex closed with a loss of 40.15 points, NSEs Nifty shed 18.40 points and The Financial Expresss Fefty was down by 18.93 points.
Dealers said that nervous operators resorted to heavy selling in the market, ahead of the UN weapons report scheduled to be tabled on Monday night.
Leading the downslide in share values, frontline IT counters remained at the receiving end, with a majority of them closing with sharp losses on sustained offerings. Another reason for the weak start of the week was a sharp fall in international markets on Friday last.
The Dow Jones Industrial Average lost 238.46 points and the Nasdaq Composite Index fell by 46.14 points following on Gulf war fears. This acted as a catalyst for downtrend in the domestic market, opined the dealers.
The BSE-30 share index opened lower at 3,283.93 from last Fridays close of 3,287.86 and immediately touched a high of 3,286.46.
Later, it met with strong resistance, sending it to a low of 3,221.69, before concluding the day at 3,247.71, registering a steep fall of 1.22 per cent. Nifty closed the day at 1,037.65, a loss of 18.40 points, while Fefty was down by 18.93 points) down 1.67 per cent) at 1,116.90.
A dealer said, A leading US-based fund was reported to have sold heavily both old and new economy shares to meet redemption pressures, resulting in a chain-reaction wherein others joined the selling bandwagon.
Following this, leading index heavy-weights lost ground, with HLL closing at Rs 178.50, down by Rs 1.35,
ITC down by Rs 8.80 at Rs 642.95, Infosys closed at Rs 4294.10, down by Rs 84.40 and Reliance down by Rs 8.80 at Rs 273.70.
However, operators could cash in on the privatisation of two state-owned oil public sector undertakings, HPCL & BPCL.
This resulted in these stocks coming under late-selling, despite early sharp gains.
Mr K K Mital, vice-president and head, Escorts Mutual Fund, said, The CCDs clearance of strategic sale of 34 per cent in HPCL and an offer for sale of 35.2 per cent equity in BPCL may not impress markets. Although the government has cleared the disinvestment in the two oil PSUs, its still not clear when they will be disinvested. A time-frame should have been fixed for the disinvestment. Without a clear action plan, the disinvestment could even take over a year. Another issue is about pricing. There are no indications how the pricing will be done, he added.
Notwithstanding the current frenzy in the market, Mr Vijay Mehta, chairman, Mefcom Capital Markets, appeared bullish when he said that the current fall may only be a technical correction.
The bearish mood should not last for long and every fall in stock prices can be used as a buying opportunity, Mr Mehta added.