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Markets this Week
Little did the Indian bourses, which opened on Monday on a positive note because of the second stimulus package announced by the government earlier, know that it would receive a bombshell two days later in the form of startling revelations of gross accounting irregularities by Satyam Computers CEO Ramalinga Raju.
The market sentiment got boosted by the second stimulus package and rate cuts, and the the Sensex rose by 317 points, to close at 10276. The wide-based Nifty gained 75 points and ended at 3121.
According to the quarterly preview of 128 companies, it is expected that the profits will fall by 8.4 per cent on a year-on-year basis in the third quarter of 2008-09.
The stocks of Tech Mahindra and Satyam Computer Services witnessed heightened trading activity on the bourses on Tuesday following a news report that the Mahindra group company was evaluating a merger with Satyam,.which of course was denied by Satyam. Tech Mahindra on its part termed it as "speculative in nature".
The Sensex on Tuesday gained 60 points to close at 10,336. The rally was led by ICICI Bank on expected gains from their bond holdings. The Nifty Index was down by 9 points to end at 3113.
The Tsunami of all corporate scams ever to hit the Indian capital markets fell on investors. Mr B. Ramalinga Raju, Founder-Chairman of Satyam Computer Services, stepped down on Wednesday, admitting severe financial wrongdoings, like fudging of accounts to the tune of a whopping Rs 7,136 crore, including Rs 5,040 crore of non-existent cash and bank balances.
Mr Ram Mynampati, President, has been appointed interim CEO of Satyam, while Mr Raju would continue till the new board, scheduled to meet on January 10.
The Satyam scrip was powdered down to a shocking low of Rs 40, down by a colossal 78 per cent, what with several FIIs offloading their shares.
The market cap plunged to Rs 2,705 crore on a single day.
The Sensex which opened 89 points higher, plummeted by 750 points and closed at 9587 soon after Mr Raju's shocking revelation. The Nifty nosedived by 192 points and ended at 2920.
FIIs such as Aberdeen Group and Swiss Finance Corporation sold their stake in Satyam on Wednesday.
Aberdeen sold more than 1.4 crore shares at Rs 43.41, while Swiss Finance sold more than 77 lakh shares for Rs 74.61, according to the data available on BSE.
Mr Mynampati, the interim CEO) said at a press meet on Thursday that one of the options before the company was to allow a strategic takeover.
He further stated that chartered accountants were looking into the gravity of the financial mess.
On Thursday, the BSE duly removed Satyam Computer Services from its benchmark Sensex and other indices. NSE too removed Satyam from its indices, including Nifty 50.
The scrip has also been excluded from the BSE 100, 200 and 500.
At the close on Friday, the Sensex was down by 180 points at 9,406. The Nifty was down by 47 points at 2,873.00.
The Bombay Stock Exchange benchmark Sensex fell by 235 points in early trade on panic selling by foreign funds and retail investors, entirely due to the Satyam saga, which has still not ended.
A team of government officials has begun investigations into the Satyam fraud, and documents have already been seized from the premises of the company in Hyderabad.
"After obtaining a judicial order from the magistrate in Hyderabad, the Registrar of Companies, in coordination with market regulator SEBI, visited the office of Satyam and seized the documents from its premises and the record office of the company," said Mr P.C.Gupta, Union minister of state for Corporate Affairs.
Inflation dips further to a 10-month low of 5.91 per cent for the week ended December 27, owing to cheaper food and other manufactured items.
Compiled by S Vasudevan
Podcast by M J Madhavan
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