Unwinding of positions due to year-end considerations hurt a market already gloomy by prospects of a prolonged war.

In fact, developments over the weekend were an indicator to the stiff resistance being faced by US troops in Iraq, perhaps unexpected. Now hope that the war will be swift and brief has dissipated. The BSE Sensex slipped 44.5 points to 3,174.22 just ahead of noon on Monday.

Margin calls were triggered off in the market today hastening the market's fall. Those who buy shares on margins were forced to unwind positions with financiers pulling out funds from the market due to year-end considerations, dealers said. Private funding takes place in the market from financiers and those financiers that do not wish to show these deals in their books withdraw funds from the market towards the close of the year (before the 31 March 2002). The financing takes place at a rate of between 12-15% dealers said. The financiers, however, plough back the money in the first week of April after withdrawing funds at the fiscal year-end.

Usually the funding takes place in second line stock and side counters (including second and third line IT and media stocks). That's probably why most second line and third line IT and non-IT stocks witnessed a fall today. The funding also takes place in stocks not available for trading in the derivatives segment.

Most second line and third line stocks wallowed in the red today. Among the top losers were Mindteck (India) (down 19.55% to Rs 14.40), R S Software (down 7.6% to Rs 22.30), Maars Software (down 7.2% to Rs 10.30), KLG Systel (down 6.8% to Rs 25), Nucleus Software (down 6% to Rs 74.65), Onward Technologies (down 5.8% to Rs 24.35), Melstar Information (down 5.7% to Rs 19), Orient Info (down 6% to Rs 34.75), Ramco Systems (down 5% to Rs 514), KPIT Infosystems (down 4.4% to Rs 169.50), Polaris Software (down 4.4% to Rs 133) and NIIT (down 4% to Rs 113.40).

Big decliners among media stocks included Saregama (down 8% to Rs 45), Crest Communications (down 6% to Rs 23.50), Tips Industries (down 4% to Rs 34), Bajaj Telefilms (down 2.8% to Rs 61.95),

Among other second rung and third rung stocks, SB&T International (down 7% to Rs 30.10), Morepen Laboratories (down 5.8% to Rs 16), Jindal Iron & Steel (down 5% to Rs 79.40), Gammon India (down 4.8% to Rs 95.10), KEC International (down 4.8% to Rs 9.90), Essar Steel (down 4.4% to Rs 7.60) and Excel Industries (down 4.1% to Rs 70) made solid losses.

Dealers say the unexpected and stiff Iraqi resistance to US and allied troops near Baghdad has caused nervousness in the market. Iraqi forces inflicted casualties and took their first US prisoners on Sunday. Concerns have emerged that US-led forces might get bogged down at the gates of Baghdad.

Monday's reversal chases a four-session gain for market indices starting Wednesday on optimism that hostilities in the Persian Gulf would be brief. The markets bounced back albeit amid volatility on Thursday, Friday and during the two-hour trading session on Saturday. The Sensex surged 133.82 points or 4.33% in the four sessions to 3,218.73 on Saturday, 22 March 2003 from its close of 3,084.91 on Monday, 17 March 2003. In fact, markets across the globe had surged last week on hopes that the war would be very short.

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