Sensex (BSE sensitive index) started higher at 4797.82 and surpassed the 4800 mark and touched the day's high of 4808.85. Sensex dropped during the mid-session to 4697.87 but staged a modest recovery after the intra-day fall of 111 points and closed at 4731.12, showing a net loss of 29.09 points from the previous close of 4760.21. The BSE-100 index gained by 6.73 points to 2144.29 from the previous close of 2137.56.

Brokers said the new account started firm but thereafter moved downwards in lacklustre activity. Considering the increased net outstandings and the long positions which rose sharply to Rs 2270 and Rs 2366 crore respectively at the last week-end, operators fear that the situation for the market is somewhat dangerous.

The squaring-up of positions by major players on the National Stock Exchange (NSE) inview of end of settlement also cut short initial rally. "The sentiment is likely to move sideways in short term as major players including overseas funds preferred to adopt a cautious approach in view of the ongoing general elections," said a broker.