FIIs continued their selling spree, so much so that even the clear beneficiaries from the budget like paper, cement and housing stocks which had posted smart gains, lost on Friday. The nervousness was reflected in FIIs and operators booking profits in software stocks, too. While the BSE Sensex lost 128 points to close at 3,417.89, the Nifty fell 33.50 points to close at 989.20. As many as 40 scrips lost 9-10 per cent in the A group of BSE today. The circuit filter of 10 percent helped prevent a free fall.

The net sales by FIIs during May was as high as Rs 852 crore. But in first three days of June their (post-Budget) they seem to have accelerated their sales further. Consider this: for the entire month of May the net FII turnover (not net investment) was a negative Rs 205 crore. But in three days (June 1 to June 3) the net turnover was a negative Rs 184 crore. ``An extreme sense of nervousness and pessimism has engulfed the FIIs operating in India due to an increasing perception of risk in the backdrop of the nuclear tests. Also, the fact that the budget did not live up to the expectations of FIIs by not meeting with any of the demands put a pressure on FIIs to sell,'' said the chief investment officer Sun F&C Asset Management Company, Gul TeckChandani.

Marketmen said that with growing political uncertainty in the region, FIIs expect the currency to take a further hit and this may be the reason for their selling. There were others who suggested that a number of these FIIswere booking profits in software stocks as these offered attractive exit opportunities as compared to other sector stocks.

``They are not by any stretch of imagination quitting the country but are definitely tense,'' said an exchange official on the behaviour of the FIIs.``FIIs have continued to sell mainly due to two reasons one, being that the budget provided no direction to kick start the economy. Secondly, because of the nuclear explosions there is a tremendous amount of redemption pressure on the FIIs from their foreign office keeping in view the fact that the western world has slated the whole of this region as unstable,'' said Malay Sameer, fund manager with Apple Mutual Fund.

``For the last two years the software industry has been the driving factor in the market and FIIs are actually selling on counters where they can book profits as there is a huge margin as against other stocks,'' added Sameer.

According to a dealer at an FII, there was practically no buying. The huge outstanding position onthe BSE was squared off in the last half hour pulling the index down further. ``The G-8 nations are slated to meet on June 7 and FIIs fearing further sanctions would imposed on the region,'' said a dealer at a large FII. To top it all a news agency flashed a message saying that the Department of Company Affairs is not too keen to introduce buy-back of shares. "This pulled down the sentiment further", said a leading broker.

However, a DCA official, according to a PTI report, said the government was yet to take a final view on buy-back. However, Samir Arora, the Chief Investment Officer of Alliance Capital Asset Management, felt that the fall was mainly due to speculative unwinding. ``The pressure should cease in a few days and stabilise. This is mainly because the budget did not do anything for the market and it's only another round of world events which will help the market", he added.The downward trend was witnessed in all scrips. Reliance closed at Rs 157, ITC at Rs 638, Sterlite at Rs 272.50, HDFC at Rs3,091, ACC at Rs 1,516, Nagarjuna fertilisers at Rs 1,780, which were all below yesterday's close.

Software scrips were net losers on the bourses closing lower than yesterday's levels. Satyam at Rs 466.75 (yesterday Rs 518.50), BFL at Rs 341 (Rs 345.75), DSQ at Rs 220.20 (Rs 244.60), Wipro at Rs 1773.75 (Rs 1850.25) and Infosys at Rs 2080.25 (Rs 2,303.25).