Mumbai: After a firm start, stocks came across sustained selling pressure and the week ended with a 2.84 per cent fall in the SENSEX, heavily weighed down by fears of war between the two nuclear-armed neighbours induced by a deadly terrorist strike in Jammu on May 14.

Investors, particularly speculators, were depressed over the serious political development, at a time when Gujarat seemed to be returning to normalcy, which was feared to flare up into a full-scale conflict between India and Pakistan.

Though the debate on government's response to May 14's terrorist attack was not likely to lead to immediate military action against Pakistan, investors generally followed domestic mutual funds which were believed to be heavy sellers in heavy weighted counters.

The euphoria in cement and PSU stocks that were in the limelight in the previous week, too dried up later in the light of reduced off-take of cement in violence- ridden Gujarat state and the delay in disinvestment in IPCL.

Heavy onslaught on May 17 triggered by a report by the Parliamentary panel that the government would defer the partial privatisation of BPCL and HPCL and would allow them to merge to create a global giant not only was limited to these stocks but also seen in other PSU shares and heavyweights.

Another major factor that affected the market was the arrest of the tainted "big bull" Ketan Parekh by the Economic Offences wing. It prompted heavy off-loading, particularly in K-10 scrips, by speculators and retail investors.

PTI