The festival of colours comes at a most inopportune time, when stock markets fear an imminent war what with the UN given just 24 hours to resolve differences over the US-proposed special resolution.

Whatever the UN decides Monday, will not have an immediate effect on Indian bourses as they are closed on Tuesday for Holi. Operators also carry a risk of carrying over positions on such a crucial day. This is perhaps what triggered a setback on the bourses early on Monday.

In just two hours of trading, the Sensex lost 45 points to 3,062.98. There were hardly any gainers and most stocks were either in the red or flat.

The Sensex's top losers were HCL Technologies (down 4% to Rs 148.50), Satyam Computer (down 2.7% to Rs 189.90), Hindustan Lever (down 2.7% to Rs 155.35), HDFC (down 2.7% to Rs 344.50), Infosys Technologies (down 2.1% to Rs 3,989) and ACC (down 2% to Rs 138).

Some second and third line IT and media stocks also were in the throes. R S Software (down 6% to Rs 20.55), DSQ Software (down 5.7% to Rs 8.95), Kale Consultants (down 4.4% to Rs 26), Trigyn Technologies (down 4% to Rs 12.90), Silverline Technologies (down 3.8% to Rs 8.70), SSI (down 4% to Rs 68.50), Hinduja TMT (down 3.4% to Rs 162.35), Moser Baer (down 3.3% to Rs 222), Mascot Systems (down 3.4% to Rs 102), Hexaware Technologies (down 3.3% to Rs 107.60), Himachal Futuristic Communications (HFCL) (down 3.2% to Rs 20.85) and Hughes Software (down 3.1% to Rs 172.85),

Among media stocks the top losers were Padmalaya Telefilms (down 7% to Rs 56.75), Saregama India (down 6% to Rs 48.40), ETC Networks (down 5.7% to Rs 39.50), Balaji Telefilms (down 3.8% to Rs 57.85) and Tips Industries (down 3.3% to Rs 33).

Brokers were asking clients, who undertake buying of shares on margins, to cut their exposure in the market ahead of Monday's crucial UN meeting as also because Indian markets are closed Tuesday.

In fact, bourses across the global are on the decline on Monday due to war fears. Asian markets were in the red. Major losers included the Hang Seng index of Hong (down 134.90 points or 1.5% to 8,821.30), Nikkei 225 of Japan (down 131 points or 1.6% to 7,871.64), the Kospi of South Korea (down 21.05 points or 3.9% to 516.60), Straits Times index of Singapore (down 24.66 points or 1.9% to 1,226.22) and the Weighted index in Taiwan (down 118 points or 2.6% to 4,357.90). China's Shanghai Composite index was down 8.38 points or 0.55% to 1,524.32.

War fears have rattled bourses across the globe over the last few trading sessions. Local bourses have been no exception – the BSE Sensex tumbled 220.68 points in 10 trading sessions to the current 3,062.98 from its close of 3,283.66 on 28 February 2003. Bull liquidation in the derivatives segment has added to the fall in the cash markets.

The market is wary of the potential war. Iraq, being a leading oil exporter, market men are worried that war will hamper oil supplies and prompt an oil price spiral. It is a historical fact that rising oil prices tend to send economic activity in reverse gear. Markets across the globe have whittled down as a result of that prospect.

If war breaks out and lasts for a prolonged period, the already fragile economies of the world would be hurt further. Stock prices may plunge as well. Escalating oil prices would prove burdensome for key industries like automobiles and petrochemicals. On the other hand, if the war is brief, oil prices will fall and bourses will bounce back.

Prices of gold and crude oil jumped on Monday after Washington gave the United Nations one more day to find a diplomatic end to the Iraq crisis before moving for war.

Crude oil futures charged one dollar higher in electronic trading in Asia on the New York Mercantile Exchange today, after ending Friday sharply lower on speculation that any war with Iraq would be short , limiting supply disruptions. Crude has rallied about 20% this year as Bush stepped up a campaign to disarm Iraq by force if necessary.

US president George Bush said on Sunday that Monday was the last day for a vote on a second U.N. resolution paving the way for war on Iraq. He left no doubt that the United States and its allies would otherwise move to invade Iraq without U.N. backing.

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