Heavy unwinding of positions by speculators, rumours of brokers associated with the "big bull" facing a financial crisis which unnerved investor market sentiment coupled with news of an impending south-east Asian crises, all played their role in sending the market into a tailspin.

The BSE-30 share Sensitive index plunged below the crucial benchmark of 3,350 to close at a low of 3,311.41 points registering a net loss of 156.66 points.

Mirroring BSE sentiment, the Nifty index also plunged by 32.15 points to close at 962.90 points. Marketmen sounded particularly unhappy about the failure of the BSE's top brass to take timely corrective action against a bear cartel. This, according to them, was the primary reason for the fall over the past few days.

"Sebi and the exchanges should have realised thatthe time was apt for imposition of margins on short-sales, in the absence of which we saw the sentiment shaken up," said a BSE broker.

With exchanges failing to clarify to the market the extent of truth in the defaulters' list which kept doing the rounds further dampened the market.

Brokers who have warehoused stocks believed to be favourites of the big bull, are rumoured to be in a bad shape as financiers are reluctant to bail out such brokers since the securities they can offer as guarantee are essentially these stocks, which have recorded considerable price erosion.

Highlighting the serious repercussions which the market at large could experience on account of the ad-hoc margins in few stocks slapped on bull operators, market experts pointed out the need for the exchanges to take corrective action against short-sellers.

Referring to the despair sales, players ironically brought to light the cruel fact of Reliance stocks and that of Karur Vysya being quoted at the same levels of Rs 149.30 on theNSE.

Reflecting the bearish undertone of the market which gripped specifically the big bull favourites, took in its stride many blue chip counters as well.

Bull favourites like ACC, Zee Telefilms, Videocon International, Sterlite BPL and Krebs Biochemicals took a severe beating to trade at a discount of 10 per cent over Tuesday's close, which was on account of the margins and the hammering activity started off by a cartel of bear operators. Among the index based stocks Arvind Mills, EIH, Tata Power and Tata Tea recorded new lows on the BSE mirroring the despair sales pressed by both the local and FII players.

According to market sources, FIIs like Capital International, Schroders, Biktet, Morgan Stanley and UTI offshore funds were reported to have sold huge chunks of pivotals which includes MTNL, L&t, SBI and ITC.

However, moderate support by UTI and SBI Mutual fund during the mid- session, provided the much needed bottom level support to the pivotals.

"We were buyers today as well. The valuationsare attractive and this looks like an artificial fall", said a top UTI official.

Interestingly, the wide discrepancy in terms of prices recorded by many of the index based stocks on BSE and NSE, was cut short on account of the continuous bouts of sales even on the first day of the trading cycle on NSE.

While Videocon International was hammered down to a low of Rs 110, market men hinted that the stage will come when investors will be left with no other alternative but to abide by the terms and conditions of the open offer price of Rs 165.

INSIGHT -- Market in oversold position

A crisis of funds on top of a crisis of confidence has taken precedence in the stock market. On the BSE, the drive at collecting higher margins following pressure from the regulatory authority, has led to a number of brokers reducing the outstanding positions in several counters.

The last badla session threw up a number of stocks where there was a sharp increase in outstandings on the buy side while at the same timethere has been an increase in deliveries for the settlement period. All this has meant an increase in demand for funds (carryforward) as well as an increase in margin requirement, which brokers and traders are being hard-pressed to provide. Hence the sell-off in a number of counters, especially those where there were a lot of outstanding positions like SBI, Reliance and ITC.

Reliance alone had a net outstanding position of 4.45 million shares and was one of those counters that were more or less responsible for the massive sell-off on Wednesday. Technically speaking, the market is highly oversold and the sensex should get a strong support around the 3200 points level.