According to brokers, the sentiment was affected mainly by the selling pressure in South-east Asian markets following the resignation of Japanese Prime Minister Ryutaro Hashimoto after the humiliating defeat of his liberal democratic party (LDP) in the upper house elections. ``Now the situation is that if other Asian markets get flu, Indian markets start sneezing,'' said a fund manager.

Stock exchanges in Tokyo, Hong Kong, Indonesia, Malaysia and Thailand fell during the day. However, the benchmark Nikkei 225 stock average closed up 270.33 points, or 1.68 per cent at 16,360.39, bouncing back from an early morning drop of nearlytwo per cent. Similarly, the yen recovered to 142.47 after earlier sinking by about three yen to 144.50, but Japanese government bonds ended weaker.

Brokers said a knee-jerk reaction to the latest developments on the Comprehensive Test Ban Treaty Front (CTBT) front and the weak composition of the ruling government also affected the sentiment. ``Optimism seems to have vanished from the local markets,'' said a BSE broker while explaining the sharp decline after the mid session.

According to market sources, Jardine Fleming brokerage firm was rumoured to have sold huge chunks of SBI and HLL which mirrored on the sharp decline of the indices. Another prominent feature of the day was huge sales by local operators in infotech stocks. While Infosys Technology, NIIT and Satyam Computers dipped by 2 per cent on an average, Square D Software, Onward Technology, Silverline Industries and Software Solution were locked at the lower limit of the price band on the NSE.

While a section of market participants attributedthe asian market meltdown as the main reason for the fall in the local indices, technical analysts described it as an inevitable correction. However, the analysts also highlighted the need of a crucial support at 3,450 level. ``Sensex took resistance at the top end of a rising channel the mechanical indicator signalling a correction," explained a senior technical analyst.

``The index has already tested the 3,316 level now it should find the gap support of 3,269 during this week,'' he explained. Sensex had gained by nearly 312 points last week following good FII and speculator support.

PSE to join ISE
BANGALORE: The Pune Stock Exchange (PSE) is likely to join the Inter-Connected Stock Exchange of India (ISE) soon. According to ISE sources, the governing council of the PSE will meet soon to take an official decision. With this the strength of the ISE will go up to 16 regional stock exchanges (RSEs) against 14 earlier. The Madras Stock Exchange had recently announced its intention to join the ISEfold.