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In this paper, we present a Monte Carlo based technique to estimate signal activity at the internal nodes of sequential logic circuits. The technique takes spatial and temporal correlations of logic signals into consideration. The Monte Carlo based techniques that have been proposed for combinational circuits can not be directly applied to sequential circuits due to the initial transient problem. The proposed approach deals with this problem by gaining insight from Markov chain theory. Experimental results show that the error (%) of estimated activity of individual nodes is within 3% in comparison to that of long run simulation results.