Satyam casts long shadow over Sensex

The Sensex lost 261 points to end at 9,715 while Nifty slipped below 3K levels to close at 2,954, down 87 points.

“Profit-taking pulled markets down today and Satyam added to the negative sentiments. Selling pressure would continue to come at higher levels till corporate earning numbers are out and some clarity emerges about the economy in general,” said Subramanium Pisupati, president at Ventura Securities. He further said the markets would continue to be range bound in the near future.

The stock of India’s fourth largest IT company, Satyam Computer, plunged over 30 per cent to Rs 158 as investors dumped the stock over its aborted bid. The stock was also hit by a downgrade from Citi, which cut its target to Rs170 per share vs Rs 305 earlier. Another brokerage CLSA cut its rating on the stock to ‘sell’, citing the Satyam-Maytas deal a major corporate governance issue. Satyam stock saw heavy volumes, with 12 per cent of equity of Satyam being traded on NSE today.

“Satyam has become an attractive acquisition now as the valuations are very attractive now,” said Bhavin Shah, Global Technology Research, JP Morgan.

Tracking the gains in the Asian markets, the Sensex opened above the 10K levels but remained choppy in the early trade. Following the weakness in European markets which opens after Indian markets and widening loss in Dow Jones futures, the Sensex fell sharply in late trade.

Realty, technology, metal, IT and capital goods stocks led the decline on the bourses. All sectoral indices on the BSE ended in the negative zone. The realty index on the BSE plunged 7.4 per cent and the biggest losers in the group were IBREL, Orbit Corp and Unitech, each down more than 9 per cent.

The BSE technology index slid 5 per cent and the metal index lost 4.4 per cent. The BSE IT index ended 4 per cent lower. The biggest losers in the pack were Satyam, Moser Baer and Rolta India.

Apart from Satyam, other major losers among the Sensex scrips were Reliance Infrastructure, Reliance Communication and JP Associates, each down more than 12.1 per cent.
Among other stock indicators, the BSE mid cap index shed 3.3 per cent and the BSE small cap index ended 2.6 per cent lower.

Global markets were mixed Wednesday after the U.S. Federal Reserve slashed its key interest rate to historic lows, with Asian stocks climbing modestly but European shares falling in early trade.

Investor enthusiasm was tempered by a mix of lingering worries about the US economy and a weakening dollar that threatened to add to the woes of Asia’s exporters. Overnight, the Dow Jones industrials surged more than 4 per cent after the Fed cut its target rate for overnight loans between banks to a range of zero to 0.25 percent and pledged to use “all available tools” to heal the U.S. economy.

The central bank’s bold actions surprised Wall Street — most analysts expected a 0.5 percentage point cut rather than 0.75 — and raised hopes of lower interest rates and cheaper money around the world to get companies and consumers spending again. In Asia, Hong Kong’s central bank followed suit with its own rate reduction while speculation mounted of further monetary easing from the Bank of Japan on Friday.

Asian markets held onto most of their gains after opening higher but European shares soon slid into the red. Benchmarks in Britain, Germany and France were all trading down by about 1.5 percent or more early in the session.

Source : NDTV