To top it all, BSE in its notice to members said that carryforward business would not come under the purview of the margins announced by Sebi. This ran contrary to Sebi's missive which did not make any case for such an exemption. In fact, on Thursday, a senior Sebi official had said the carryforward business would also be included for the computation of the margin.

Top Sebi officials were not available for comment on Monday. BSE executive director RC Mathur said carryforward business attracted a 15 per cent gross exposure margin as present and, hence, the latest gross exposure margin was not applicable to Type 1 members trading inA-group stocks. However, Type 1 members need to pay the new margins for trades in B1 and B2 group stocks.Sebi had earlier directed BSE to include carryforward business when it had asked exchanges to put a 20 times gross exposure limit on a broker's business. The exchange had, at that point of time, held that brokers doing carryforward business will not be exempt from calculation of gross exposure limits.

Amidst all the confusion, the BSE-30 share Sensitive index dipped below the 3,000-mark to close at 2,990.44 points, registering a net loss of 12.10 points. Although, the initial phase of the session saw the index climb to a high of 3,029.15 points, the early gains were wiped out on account of bull liquidation and intra-day squaring up of business by local punters.

According to market observers, the reaction was not that alarmingly because of two reasons. One, the long positions on BSE were marked lower on account of the sell-off by institutional bulls. Second, the practice of collecting upfront marginswould be applicable on NSE from December 16 onwards, beginning of the new settlement.

Hectic intra-day squaring up of business transactions was also attributed to the newly introduced norms on the exchanges. "Market felt the aftereffects of the huge sell off by the domestic institutions," said Sandeep Shah of Kotak Securities.

However, FIIs continued to be net buyers on the bourses. NSE received a huge FII purchase order of Rs 42 crore, while on the BSE, FII net purchases were pegged at Rs 2 crore. Domestic institutions, however, were net sellers on BSE. They sold stocks worth Rs 18 crore on BSE, while on NSE, they were net buyers to the tune of Rs 7 crore. Local funds pegged their sales at the pharma and software counters. Besides UTI, LIC Mutual fund and BoI Mutual fund were also rumoured to have sold huge chunks of HLL, Pfizer, Nestle and Smithkline Pharma.

It is learnt that a lot of FII purchases were pegged at the Satyam Computers counter, which shot up by 5.05 per cent to close at Rs 572.75 onBSE. The counter clocked a phenomenal volume of over 1 crore shares. Institutional purchases was attributed to the change in perception on account of the joint venture between Satyam Computers and the subsidiary of GE.

According to market observers, a great deal of institutional sales were witnessed at the counters of Astra-IDL, Emerck and Burroughs Wellcome.

Beginning December 15, institutions will have to trade in these stocks only through the dematerialised mode. "Sell the physical stocks and bid for fresh demat stocks seems to have been the motto for the day," said a dealer with an institutional brokerage firm.

Stocks like Bhel, Bata India and Marico received buy orders only in the demat mode. Among the pharma stocks which registered substantial profit booking, Cipla registered two cross deals of 10,000 and 14,400, at Rs 840 and Rs 828, respectively. Although the first deal, which was reported at 11.30 am was priced at a premium of 3 per cent to the prevailing market price, the second dealreported towards the last phase was priced at a discount to the market price at Rs 828.