The benchmark index opened 30 points lower from 4,085.66 and plunged to 4,067.36 as the lowest. Then it had a sharp rise followed by a set of hikes to the highest 4,147.69. But there it nose-dived all the way and then edged up to the closing. A reversed "U" was clearly seen on the traces of the index.

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, closed at 13,613.61, down 52.67 points or 0.39 percent.

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Of the A shares listed on the two exchanges, as many as 945 went down this morning, while 371 ended up and 136 flat. Financial shares stood out among the few rising stocks. Shanghai Pudong Development Bank, the Industrial Bank and Huaxia Bank surged to lead the bank shares, while China Life Insurance and Hongyuan Securities were also up, lifting the financial share index to top the sector's growth list.

B shares fell. Of the 109 B shares listed on the two exchanges, only 11 went up and 10 ended flat.

Although the stocks have been recovering from the previous losses for a week, the volatility in the market has diverted more investors to find shelters in mutual funds.

On Wednesday, after seeing six consecutive days of growth, the new A-share account opening was low at 187,145, while the new accounts opened for fund transaction jumped to 139,372, from Monday's 27,000 and Tuesday's 34,000. Since June 4, the daily new fund account opening had been between 20,000 and 40,000.

The last times when China Depository and Clearing Co Ltd registered such big amounts of fund account opening were May 31 with 449,421 accounts and June 1 with 187,972, when investors realized the plunges in the stock market caused by the stamp tax rise were not "temporary".

Mutual funds, which invest heavily in good-performing blue-chips, have been always seen as a safe heaven for investors. On Tuesday, the index finished 1.4 percent up on the six consecutive day of growth. But also on that day when the market heard the consumer price index grew 3.4 percent last month, the Shanghai Composite Index plunged 60 points, making the daily spread at 163 points.

The reason for the increase in new mutual fund accounts the next day, might be a result of fear for further tightening measures may trigger a new round of continuous drops, some analysts believe.

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