Satyam scandal shocks Dalal St, key indices tank

Satyam scandal shocks Dalal St, key indices tank
PTI
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First Published: Sat, Jan 10 2009. 01 24 PM IST
Updated: Sat, Jan 10 2009. 01 24 PM IST
Mumbai: The New Year rally failed to last long and the key indices plunged by about 6.0% as the disclosure of the country’s biggest accounting scandal at Satyam Computer sent shivers down the spine of investors and crushed the impact of a second stimulus package.
On actual basis, the Bombay Stock Exchange 30-share barometer tumbled by 1,063.25 points, or 11%, from its intra-trade high of 10,469.72 to end the week at 9,406.47.
It, however, registered a loss of 551.75 points, or 5.54%, from its last weekend’s close.
The broader 50-share Nifty of National Stock Exchange also tumbled by 173.75 points, or 5.70 points, to end the week at 2,873.00 from its previous weekend’s close of 3,046.75.
In a dramatic turn of event, the markets went into a tailspin and crashed by 749 points on Wednesday after India’s fourth largest software exporter admitted to its accounting manipulations, raising concerns over corporate governance issues.
The gravity of the stunning development could be gauged by the fall in share price of Satyam, which hit an all-time low on the BSE as well as the NSE.
This also led to Satyam’s humble exit from the Sensex family as well as from the BSE IT and Teck indices, BSE-100, BSE-200 and BSE-500. Satyam would be replaced by Sun Pharma in the Sensex and by Reliance Capital in Nifty from 12 January.
The mood, however, was upbeat in initial two days as the concerted efforts by the government and the Reserve Bank of India to boost growth pushed up the markets well above psychologically important 10,000-level.
The markets also bounced from its trading low of 9,250.82 on Friday after the inflation fell below 6.0% for the first time in ten months.
Realty sector, too, was hit hard as it came under a fresh selling onslaught triggered by market perception that several realty companies do not adhere to strict corporate governance practices. DLF fell by 28%, HDIL by 27% and Unitech lost 23%.
Satyam fell to Rs11.50 per share, a loss of 86.57% over the week.
On 2 January, the RBI announced a cut in the repo rate and the reverse repo rate by 100 basis points each, and also slashed the Cash Reserve Ratio by 50 basis points to 5%. The government announced fiscal measures to support the slowing economy.
Barring the BSE-Auto index, which survived to land just in positive terrain, all other sectoral indices ended in the red with an average fall of 0.6% to 24.6%.
The BSE-Realty index was the top loser and crashed by 608.42 points or 24.61% to end the week at 1,864.09.
On the NSE, the S&P CNX Defty plunged by 114.70 points or 5.32% to 2,043.10 from preceding weekend’s close of 2,157.80.
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First Published: Sat, Jan 10 2009. 01 24 PM IST
More Topics: Markets | Satyam | Sensex | BSE | NSE |