The BSE 30-share index fell by 49.87 points to close at 3,180.73 down from its previous close of 3,230.60. The NSE-50 index also lost 22.35 points over its previous close of 942.25 to close on Thursday at 919.90.

Brokers said that the subdued sentiment is expected to continue due to lack of fund and institutional support on the bourses, as they remain net sellers.

Provisional figures collated by NSE showed that FIIs were net sellers on Thursday with net sales at Rs 32.84 crore. The domestic institutions and funds also were net sellers for the second day in a row with net sales of Rs 7.09 crore.

Marked absence of UTI from the market, further led to a weakening of sentiments. There was some amount of sporadic buying by insurance bodies like LIC, GIC and United India Insurance.

"The overall problems in the market are still looming large and added to it is thepolitical turmoil. As long as the rupee is under pressure it will not be possible to get the consonance of FIIs in a decisive way. The interest in the software sector by FIIs will be there because of the benefit of devaluation of rupee. Otherwise, the market will remain in the range of 3,000 to 3,400 levels", said Duleep Bhat, a BSE broker.

The remarks of new IDBI chairman, GP Gupta about enhanced participation in equity markets did not enthuse the market, said Gupta. The market heavy weight HLL which has an index weightage of 19.38 per cent, saw a huge fall of Rs 70.25 to close at Rs 1,525 on the BSE. On the NSE, HLL fell by 5.12 per cent to close at Rs 1,506.

Credit Suisse First Boston, Alliance Capital and Oppenheimer are believed to have bought HLL yesterday. While CS First Boston was selling in the counter of HLL on Thursday.

Reliance shares also egged up on the fact that buy back of shares in being introduced in the next session of parliament and the scrip saw huge volumes of 32 lakhshares.

Some off-shore funds are tipped to have bought the scrips of Pentafour Software Rs 589 (Rs 586) and Satyam Computers Rs 272 (Rs 378). The scrip of BFL also went up and hit the circuit at higher level of Rs 317.75. DSQ Software went up to hit the circuit at Rs 264.90 but closed lower at Rs 249.90. Digital Equipment closed lower than yesterday's close at Rs 125.30.

Hindalco saw buying by domestic mutual funds but the major losers were the cement sector stocks.