Mumbai: Fears over a possible Gulf war drove the SENSEX sharply down by 40.15 points to close at 3247.71 at the Stock Exchange in Mumbai on January 27, as nervous operators resorted to heavy selling ahead of the release of a key UN weapons report.

Reeling under selling pressure, share indices stretched losses for the third consecutive session owing to geopolitical reasons that weighed heavily on the market, dealers said.

Leading the downslide in share values, IT counters remained at the receiving end with majority of these stocks closing with sharp losses on sustained offerings.

A steep fall in the Dow Jones Industrial Average by 238.46 points and in the Nasdaq Composite Index by 46.14 points last Friday also influenced the downtrend.

A leading US fund was reported to have sold heavily both old and new economy shares to meet redemption pressures, resulting in a chain-reaction wherein others joined the selling bandwagon.

The BSE-30 share sensitive index opened lower at 3283.93 from last Friday's close of 3287.86 and immediately touched a high of 3286.46. Later it met with strong resistance and dipped to a low of 3221.69 before concluding at 3247.71, a steep fall of 1.22 per cent.

The broad-based BSE-100 index also dropped by 24.40 points to 1593.18 from previous close of 1617.58.

However, operators could not take advantage of the privatisation of the two state-owned oil PSUs (Public Sector Undertakings), HPCL & BPCL resulting in these scrips coming under late selling, despite early sharp gains.

PTI