``Reports emanating from Islamabad are a matter of grave concern and we are closely watching the situation,'' a spokesman in the Prime Minister's office said tonight.

He said Prime Minister Atal Behari Vajpayee was keeping himself fully abreast with the developments and was maintaining constant touch with the Indian mission in Islamabad. ``All the members of the Indian mission in Islamabad are safe,'' the spokesman said.

Meanwhile, a senior Defence official said that the armed forces were on a `state of full alert'. ``All the three wings of the armed forces are on full alert and we are monitoring thesituation closely.''

The generally held view that ``India supports democracy in Pakistan'' means that the fallout of martial law will immediately have the effect of increasing tension along the international border and the Line of Control.Certainly, the return to a political dialogue with Pakistan, which would have been on top of the new government's agenda, will now be put interminably on hold. Foreign policy analysts wondered if the US would now rethink its plans about the visit of President Clinton to India, Pakistan and Bangladesh early next year.

Ironically, as a democratically elected Vajpayee returns to Delhi after having bested Pakistan in the war at Kargil, his nemesis and author of the Kargil invasion Pervez Musharraf, will take over the helm of affairs in Islamabad.

There was no news till late tonight about the fate of Gen. Khwaja Ziauddin, the former ISI chief who had been appointed the chief of army staff in place of Musharraf by Nawaz Sharif earlier in the evening.

It is widely believedhere that Nawaz Sharif, under serious American pressure to curb terrorism and control the Talibanisation of his country, had dared to reassert himself as the political master of Pakistan. In the last few weeks, he as well as his brother Shahbaz Sharif, the chief minister of Pakistani Punjab, had taken the Taliban to task for fomenting sectarian violence in Pakistan.

But with Musharraf and Aziz as the key actors in place now in Islamabad, it seems likely that the bond between the Taliban and the new rulers in Pakistan will only grow.

With the linkages between the Taliban, backed by Pakistani mujahideen and its out-of-uniform soldiers, and terrorism in Kashmir, the impact on India will be significant.