Sensex snaps 3-day gaining streak, Satyam tanks 30 per cent

MUMBAI: Heavy selling in the last two hours of trading pulled down the benchmark Sensex on the Bombay Stock Exchange by over 260 points amid controversy over the 1.6 billion-dollar acquisition decision by IT major Satyam Computer which lost a mammoth over 30 per cent.

Marketmen said though Satyam called off the deal to buy out two infrastructure companies promoted by the sons of its chief Ramalinga Raju, it had raised serious questions of corporate governance and institutional investors resisted the decision, which impacted the sentiment adversely.

With the issue of corporate governance coming to the fore again after the IT major's decision to buy out two infrastructure companies, investor sentiment did not get any boost.

The barometer mostly moved in an erratic fashion before emergence of heavy selling pressure sparked by weak cues from European bourses which opened lower despite a record rate cut the US Fed Reserve yesterday. However, the Asian bourses closed the day higher in the range of 1-2 per cent.

Bucking the positive trend in Asian markets, the 30-share index on BSE finally closed the lower by 261.69 points at 9,715.29 to snap the three-day gaining streak.

The bellwether index had gained over 331 points in the past three days and breached the crucial 10,000 mark yesterday for the first time in more than a month.

The broader 50-share Nifty of the National Stock Exchange also dropped by 87.40 points or 2.87 per cent to close at 2,954.35 from its last close.

Satyam, fourth largest software exporter, was hammered on bourses though the company called off the controversial deal to buy out Maytas Properties for 1.3 billion dollars and acquire a majority stake of 51 per cent Maytas Infra for 0.3 billion dollars which faced sharp criticism from institutional investors.

Maytas Infra on other hand was stuck in the lower circuit filter of 20 per cent.

With hectic selling emerging, all the sectoral indices closed down but the realty index bore the maximum brunt and settled lower by 7.36 per cent. The loss comes after a string of gains in the past last six days during which it rose by a whopping 35.82 per cent.

Teck, power, metal and IT indices closed down in the range of 4-5 per cent.

Though Stayam was battered and the sectoral index closed lower, blue-chips Infosys and Wipro rose over 1 per cent each. Brokers said these shares looked attractive though the rupee is gaining strength agianst the US dollar.

Besdies Satyam, the other big losers included RCOM which lost 13.36 per cent after reports of the government seeking a special audit of the company by the Comptroller and Auditor General.

Reliance Infrastructure was the second biggest loser at 13.73 per cent. Besides Jaipraksh Associates (12.11 per cent), cement major ACC was the prominent loser at 9.21 per cent.

Realty major DLF too took a severe beating and closed down by a hefty 8.64 per cent.

India's largest private sector lender ICICI Bank, however, spurted by 2.43 per cent and HDFC Bank by 1.83 percent.

The market breadth was negative with 1,569 counters registering losses while 956 others closed with gains at close on the BSE.

The trading volume increased to Rs 4,893.61 crore from Rs 4,149.73 crore on Tuesday. Satyam Computer was the most active scrip with highest turnover of Rs 551.74 crore followed by RIL (Rs 347.29 crore), HDIL (Rs 305.36 crore), Reliance Infra (Rs 165.45 crore) and Educomp Solutions (Rs 160.42 crore).