Iraq's unexpected brave response to advancing American troops has led the market to believe that the end to the war is not as imminent as earlier anticipated.

This saw the domestic market slipping in early trades. The 30-share Bombay Stock Exchange sensitive index was down 36.30 points or 3,182.43. War concerns also prompted global oil prices to rebound by 2% Monday. US light crude oil rose 56 cents a barrel to $27.47.

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.

Top losers in the Sensex on Monday included Zee Telefilms (down 2.4% to Rs 72.60), HCL Technologies (down 2.4% to Rs 161.70), Satyam Computer (down 2.2% to Rs 206.20), Hindustan Lever (down 2% to Rs 159.70), Tisco (down 1.9% to Rs 141.10), Telco (down 1.6% to Rs 160), Bajaj Auto (down 1.6% to Rs 496.70), Dr Reddy's Laboratories (down 1.5% to Rs 897) and ICICI Bank (down 1.6% to Rs 138.50).

Most second and third line tech stocks were in the red. Among the big losers were R S Software (down 7.6% to Rs 22.30), DSQ Software was down 6.7% to Rs 9, Nucleus Software (down 6% to Rs 74.65), Melstar Infotech (down 5.7% to Rs 19), Orient Information (down 5% to Rs 35), Onward Technologies (down 5% to Rs 24.55), Ramco Systems (down 5% to Rs 513), Kale Consultants (down 5% to Rs 28.15), KPIT Infosystems (down 3.9% to Rs 170.30), NIIT (down 3% to Rs 114.50), Polaris Software (down 3.3% to Rs 134.70), Subex Systems (down 3.3% to Rs 93.20), Hexaware Technologies (down 3.1% to Rs 117) and Infotech Enterprises (down 3.3% to Rs 129) red.

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.

The markets surged sharply over the last four trading sessions as institutional investors including FIIs put to use some of the cash and conducted bargain hunting hoping that the war would be short-lived. In two trading sessions on Wednesday and Thursday, FIIs pumped in a net Rs 240.70 crore (Rs 2.4 billion), making their biggest recent inflow in this short span.

The two-day surge in FII inflow comes after a slowdown over the last few days over war concerns. Now, cumulative FII inflows for March 2003 (till 20 March 2003) have reached Rs 243 crore (Rs 2.43 billion) compared to an inflow of Rs 378 crore (Rs 3.78 billion) in February 2003. The inflow last month was lower than the Rs 887.90 crore (Rs 8.87 billion) infused by FIIs in January 2003.