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Effect of an axially applied magnetic field on the stability of a ferrofluid flow in an annular space between two coaxially rotating cylinders with nonaxisymmetric disturbances has been investigated numerically. The critical value of the ratio Ω∗ of angular speeds of the two cylinders, at the onset of the first nonaxisymmetric mode of disturbance, has been observed to be affected by the applied magnetic field.