The Sensex closed at 2,862.52 against its previous close of 2,933.85. On the National Stock Exchange, the S&P CNX Nifty was down 18.25 points from its previous close of 852.80. According to figures collated by NSE, FIIs were net sellers to the tune of Rs 4.02 crore while the domestic institutions also were net sellers at Rs 1.04 crore.

On BSE, FIIs showed hectic activity with purchases aggregating Rs 36 crore and sales Rs 39 crore. The Indian financial institutions were also very active with purchases totaling Rs 43 crore and sales Rs 22 crore, thus logging a net purchas figure of Rs 21 crore.

Market participants feel that even though worldwide the markets have crashed the effect on Indian markets has been limited with the markets showing some resilience."The direction of the markets will be based on whatdirection does the Dow Jones take today. With the market sentiment at its lowest ebb the markets will remain weak", said Ajai Doshi, a BSE broker.

The software sector stocks and the other blue chips were hammered with the scrip prices sliding down on an average by 6 to 7 per cent."Taking a cue from Nasdaq which also went down by 140 points the software sector saw a lot of profit booking", said Dilip Bhat, a BSE broker.

"Fundamentally, the economic scenario worldwide is grim and it is still going to deteriorate. And the emerging markets will see a further beating as the FII allocations change due to further redemptions. On the margin it will affect India also", said the head of equity investments at Prudential ICICI Asset Management Company, Shahzad Madon.

Shahzad further added that the issue here was of chooisng the right stocks to invest in as there will always be some sectors that will outperform the market and there will be some that will underperform the market.

"The sentiment continues to bebearish as the level of commitment in the market is very low with operators, speculators, traders and investors keeping at bay", said Parag Dalvi of Pranav Securities.

"The economic crisis in Russia, the Japanese economy experiencing its darkest phase and the dollar easing as compared to the major currencies, the situation at the BSE was grim with bull operators staying away from the trading activity in apprehension since the market opened", said Doshi. The Foreign Institutional Investors put selling pressure and the Sensex fell sharply and but for Unit Trust of India there were not many domestic financial institutions in the buying counter.

The off-shore fund of Canbank Mutual Fund was reported to have bought Zee Telefilms, Colgate and sold Colgate. Leading operators were reportedly buying Zee Telefilms. Capital International was reported to have bought Fujitsu ICIM.

FIIs pressed sales on the counters of ACC, Reliance, Tisco, Telco, Hindalco, SBI, Bata, Cochin Refineries, BPCL, Gujarat Ambuja. Softwareindustry was worst hit as the maximum shares were sold in the market. Trading remained bad throughout the day and market players kept a low profile seeing the overall scenario worldwide.

Software stocks witnessed huge turnovers with Satyam computers at Rs 252.17 crore, Pentafour Software at Rs 85.94 crore, Infosys Technology Rs 32.86 crore, Silverline Industries at Rs 13.83 crore, BFL Software Rs 6.75 crore, Rolta Indutries Rs 5.55 crore, HCL Rs 5.42 cr, Tata Infotech at Rs 3.46 cr, Software solutions at Rs 2.49 cr, Aptech at Rs 2.24 cr.