Nervousness gripped the bourses in early afternoon trades soon after news broke out that former Gujarat state home minister Haren Pandya was assassinated in Ahemdabad on Wednesday morning.

The news compelled the 30-share BSE Sensex to come off the day's high and it was trading higher by just 3 points at 3,143.83 at 12:30 IST. Just ahead of the news, the Sensex was trading with a gain of about 12 points at 3,152.

Heavyweight Reliance Industries (down 0.8% to Rs 283.60) slipped into the red. It came off the day's high of Rs 288. Satyam Computer (down 0.3% to Rs 202) also came off a high of Rs 205.90.

After the assassination attempt, Pandya was rushed to the V S Hospital in Ahmedabad where doctors said he succumbed after receiving multiple bullet injuries.

The market's attention will now be diverted to developments in Gujarat, dealers said. Any trouble in the state following the incident will have a bearing on market sentiment.

Selective buying is being witnessed in the market today. Among the stocks that were pursued by institutions today included Bhel, Divi's Laboratories and banking PSUs like Punjab National Bank and Canara Bank.

Bhel (up 2.7% to Rs 224.80) proved firm even after the news of the assassination. The scrip hit a 52-week high today. Modest volumes accompanied the rally on the counter. Local mutual fund Prudential ICICI was believed to be buying the stock. Recently, another local fund Alliance Capital had mopped the stock.

The newly listed Divi's Laboratories (up 5% to Rs 228) surged albeit in volatile trading. The scrip clocked high volumes of 700,000 shares on BSE. Local mutual fund Birla Sun Life Mutual Fund is believed to be mopping up the stock.

Select banking stocks like PNB and Canara Bank were in demand. PNB (up 1.5% to Rs 99.75 ) currently trades at close to a life-time high. Canara Bank was up 1.1% to Rs 68.55.