On a day marked by massive volatility, which saw an intra-day movement of around 900 points, the Sensex closed the day shedding a hefty 227 points, or just over six per cent.

Across-the-board selling was witnessed with scores of stocks falling by the wayside as fear gripped the market over the sharp fall in the Nasdaq and other international markets.

On Monday night, the Nasdaq had fallen by over seven per cent and other markets in the Asia-Pacific like Japan, Hong Kong, Singapore and others were also down sharply. Compared to other trading days, the fall was more severe in old economy stocks at the BSE while the new economy stocks were somewhat spared by the operators. But most of the new economy stocks also closed lower. The decline was also due to the finance minister's announcement in Parliament that rolling settlements in the A group stocks would be introduced from July 1.

This move, it is felt, will lead to a lack of speculator interest in the market.

The market opened sharply lower in the morning with the BSE 30-share Sensex down by over 300 points in the first half of trading. Apart from the crash in the global markets, the delay in commencing trading on the NSE by 90 minutes due to a technical problem also affected sentiment.

A dealer at a leading broking firm said: "Since Tuesday was the last day of the settlement on the NSE, the delay in trading led to panic in the market with operators offloading their holdings on the BSE."

But after the opening of the NSE at 11.30 AM, the market recovered sharply due aggressive covering at the exchange and active buying by domestic institutions especially the Unit Trust of India (UTI). However, on an extended session which went on till 5 PM at both the premier bourses, there was further panic selling following media reports of the involvement of some members of the ruling coalition in a defence bribery case. This led to the Sensex falling sharply again by 350 points. But some short covering led to a recovery with the Sensex finally closing 227.24 points (or six per cent) lower at 3,540.65. At NSE, S&P CNX Nifty was also down sharply and closed 73.25 points (over six per cent) down at 1,124.70.

"This was one of the most volatile days witnessed in Indian stock market history," a dealer at a top broking firm said.

Even when there was across-the-board selling, NIIT closed higher on value buying by institutiions after being battered in the last three trading sessions. Other prominent stocks which closed higher included Bank of Baroda, Corporation Bank and Moser Baer.

"There was some select buying in some of the counters as valuation at these levels in some of the stocks look good," said Mr Nikunj Doshi, research head, Refco-Sify Securities. Among the major losers of the day were ACC, MTNL, Digital Equipments, ITC, Nestle, Reliance Industries and Reliance Petroleum. Despite the massive volatility, there was some increase in the volumes over those recorded on Monday.