The selling spree across the board, with local and foreign institutional operators refusing to keep commitments open on the NSE, the last day of the trading cycle, saw the Nifty index nosedive by over 60 points during the early session to touch an intra-day low of 1,100.10 points. The trigger for the recovery took place on the BSE, when trading started at 12.55 pm due to a technical snag.

Reflecting the recovery and the stabilised nature of trades during the mid-session, the 30-share BSE Sensitive Index closed at 3,945.13 points, registering a net fall of 77.05 points.

The fall of over 7-8 per cent on an average in thesoftware industry counters was largely attributed to the over-bought positions.

"The nuclear explosion factor provided a good trigger for the unwinding of positions. The dust should settle down in a week or two," said Maulik Sharedalal, director of Kaji and Maulik Securities. "A good portion of the fall was caused by nervous bull liquidation and it possibly got accentuated because the exit was not available on the BSE. Similarly, a portion of the sell off that could be attributed to FIIs seems to be more for those with a shorter horizon like hedge funds," he explained.

Infotech counters recorded erratic and volatile price movements in the absence of institutional support. The fear of US sanctions, which would leave a negative impact on the earnings of the software companies, saw the local and foreign punters refraining from these counters despite the FII limit being low. Pentafour Software, Satyam Computers and NIIT recorded losses to the tune of 7.99 per cent, 5.67 per cent and 2 per centrespectively.

The selling in the software counters was most strongly felt in the cash group counters, where the carryforward facility in not available.

BFL Software fell by 9.40 per cent to close at Rs 308.75 and Silverline Industries fell by 5.25 per cent to close at the day's low of Rs 73.95.

Says Milind Karmakar of Dalal and Broacha: "Although software stocks were victims of initial panic they recovered later. I personally feel that with the deadline drawing near for Y2K problem the US is also worried. With sanctions it might not be able to meet the deadline as most of the software experts in US are Indians."

But a statement by National Association of Software and Service Companies (Nasscom) executive director Dewang Mehta, the apex body of the Indian software industry, in Delhi, helped allay fears on the bourses. "Today the US business requires Indian software expertise. So, we do not foresee any sanctions against the software industry as it will be detrimental to the interests of the US businesstoo," says Mehta.

The US is the single largest market for Indian software exports and it accounted for about 60 per cent of the total Indian software exports of about $1 billion.

Jardine Fleming and Credit Lyonnais were reported to have sold huge chunks of pivotals during the first phase of the trading session. However, towards mid-session, Morgan Stanley was rumoured to have bought considerable chunks of MTNL, Bajaj Auto, Larsen, ACC and Hindustan Lever at lower levels.

Although UTI was rumoured to have invested over Rs 80-100 crore in the market today, the concentrated buying according to sources was done on the BSE at the counters of ITC, HLL, ACC and MTNL.

Local and foreign Mutual Funds were rumoured to have adopted a wait and watch attitude.

However, the institutional support help the classic defense stocks recover towards the last phase, to close an edge over the intra-day's closing.

According to technical analysts, the index should find a strong support at the 3,820 levels, from where itwould bounce back after a minor hiccup.