Mumbai: The Sensex fell 2.9% on Monday, weighed down by weak Asian markets and concerns about quarterly earnings, but Satyam jumped two-thirds after the government stepped in to help restore confidence in the scandal-rocked outsourcer.
Wipro shares dropped more than 12% after the no. 3 outsourcer said the World Bank had barred the company from direct contracts until 2011, citing a conflict of interest.
The market briefly pared losses after industrial output IIP unexpectedly rose in November, but there was little support forthcoming with many uncertainties clouding the outlook.
By 12:45pm, the 30-share BSE index was down 2.94% at 9,132.80 points, with 27 components lower.
“Much of the negative sentiment in the market is due to weak global markets and also concerns about the quarterly earnings,” said Sandeep Neema, fund manager with JM financial Mutual Fund.
Satyam shares were up 51.15% at Rs36.05, off a high of Rs40, after the company’s market value slumped to $330 million last week from more than $7 billion just six months ago following revelations of an accounting fraud.
A newly constituted three-member board, appointed by the government, began a meeting on Monday in the southern city of Hyderabad to lay out a roadmap for clients and staff. The company is expected to hold a news conference at 5 pm.
Wipro was down 9.3% at Rs227.45.
Traders said investors were also concerned that the scandal at Satyam, which last week said it had falsely inflated profits for many years, would trigger tighter regulations.
The Sebi said on Friday the certification of corporate results from the December quarter by auditors would be subject to peer review in a bid to assure investors the fraud at Satyam was unique.
“There are apprehensions that such a review will lead to more qualifications in companies’ books,” said VK Sharma, head of research at Anagram. “There will be a fear element in the market about hyperactivism of auditors.”
Industrial output grew 2.4% in November against market expectations for a 1% drop.
Bellwether Infosys Technologies Ltd was trading down 1.7% at Rs1,175, ahead of its quarterly earnings on Tuesday.
In the broader market, losers overwhelmed gainers by about 1.8:1 on below average volume of 150 million shares.