According to market sources, UTI sold over 7 lakh shares of SBI which saw the scrip dip further to a low of Rs 155. On the GDR front, although the SBI GDR (each GDR entitles two equity shares of the bank) witnessed a fall in its premium from a high of 25 per cent, it continued to trade at a premium of 21.7 per cent at $ 8.95.

Reflecting the pessimism in the air, the Skindia GDR index also registered a net fall of 2.75 per cent during mid-day session to trade at 515.20 points."Continous liquidation on account of redemption pressure continued to unnerve the market despite strong statements by the finance ministry to the effect that they would extend monetary support to UTI to bail them out of the US-64 problem," said SandeepShah of Kotak Securities.

The Reliance GDR also declined by 5.08 per cent to trade at $ 4.68. On the local front, Reliance was traded in the band of Rs 102.80 and Rs 106.30 respectively, to finally close at Rs 104.05 - the crucial support level according to technical analysts. The stock recorded a phenomenal volume of over 1.8 crore shares (84.55 lakh shares exchanged hands on the BSE, while the volumes clocked a high of 96.72 lakh shares on the NSE).

FIIs sold stocks worth Rs 75 crore on the local bourses, while the local institutions were net buyers to the tune of Rs 45 crore.

"The increased flow of stocks worth Rs 30 crore into the system could create a panic, with the net long positions in the market on the rise," explained a BSE broker in the light of the continous FII sales.

Interestingly, ICICI recorded a substantial recovery on the back of rumours that UTI has decided to buy huge chunks of the stock. The stock closed at a high of Rs 45.75 registering a net recovery of 7.7 per cent.

Accordingto market sources, Morgan Stanley sold about 1 lakh shares of Infosys Technologies, which saw the stock close at a loss of 3 per cent over its previous close. FIIs were reported to have sold at the counters of Zee Telefilms, Dr Reddy's Lab, Nestle, Reliance, SBI, ITC and IDBI.

Although info-tech counters were on the sell list of the local and foreign institutions, Wipro registered a sharp rise of 7 per cent. While Pentafour Software was down by 6.24 per cent, Infosys declined by 5.3 per cent and Satyam Computers by 3.77 per cent.

Technical snag hits BSE trading system

The Bombay Stock Exchange's trading system (BOLT) continued to absorb trades punched in even after the official closing of 3.30 pm. According to market sources, the system continued to function till about 3.34 pm. However, on account of the technical snag, the trades entered even during the last phase of the trading system was not taken into consideration by the system. This resulted in the index closing at 2,811 which again createdpanic in the market. However, after the system absorbed all the trades which were executed during the last few minutes of the official trading hours it closed at 2,832. Market was agog with rumours that since the crucial index barrier of 2,820 was breached the exchange extended its trading by another few minutes.