Thanks to across the board unloading, the index touched a 22-month low of 3436.75 points. With the level of 3495 points is broken, the next major support for index remains at around 2750 points. While the sentiment for tech stocks worsened, the old economy stocks witnessed fresh panic, and lost substantially. And the fall of 219 points in the index was mainly on account of a sharp drop on counters like RPL, Reliance, ITC, SBI, MTNL and ICICI. HLL did not fall much. The stock is was down just 2 per cent.

The trading volume was marginally higher but higher trading duration was partly responsible for higher liquidity. The latest market fall has shaken the sentiment badly, and it will be some time before the confidence is restored.

While valuations, as the fundamental analysts suggest, have come down to very attractive levels, the damage which has been done in the last three weeks will haunt the market, and will find it difficult to attract sustained buying. A round of buying did occur during the mid-session but it failed to sustain at higher levels, and selling gathered momentum during the second half. While the fall may show a slowdown, and with the government's intervention UTI may also provide some buying support at lower levels, one needs to be cautious of long positions, even at these levels.

Any long position will bear the high risk/low reward tag. Unless the odds favour the long side of the market, which is not possible without an improvement in scenario, one should be very cautious of long positions. Even if purchases are made, volume should be very low, and stop-losses should be small.