Mumbai Stocks Fall, Satyam Worries

123jump.com Staff
17 Dec, 2008
New York City

Stocks in Mumbai fell after Satyam Computer suggested a plan to acquire a company controlled by its chairman. The company was forced to cancel the plan after the stock plunged more than 35%. Reserve Bank of India in its annual report suggested that economic growth may slow on global worries.

[R]12:45PM New York, 7:30PM Mumbai - Satyam plan to acquire a related company dampened trading sentiment in Mumbai.[/R]

Market Sentiment

Indian stocks fell after Satyam called off its bid to acquire two related companies owned by Chairman Ramalinga Raju.

Chairman Raju and others hold 36% in Maytas Infrastructure and 35% in Maytas Properties. Satyam fell 31% and wiped 46.8 billion rupees off its market value.

In Mumbai, the BSE 30-share Sensex index declined 2.6% or 261.69 to 9,715.29, and the CNX Nifty dropped 2.9% or 87.40 to 2,954.35.

Of the stocks traded on the BSE, 956 rose, 1,569 declined, and 72 were unchanged.

Trading Statistics

Daily turnover on main-board rose to 4,882 crore rupees from 4,149.73 crore rupees yesterday.

Satyam Abandons Acquisition Deal

Satyam Computer Services Ltd today called off its acquisition plan of Maytas Properties and Maytas Infrastructure promoted by chairman. The company intended to purchase Maytas Properties for $1.3 billion and pay $300 million for a 51% stake in Maytas Infrastructure.

Satyam didn''t intend to take the proposal to its shareholders. Investors are concerned that the company board may not stand up to the chairman and protect shareholder interest.

RBI Concerned on Economic Growth

Reserve Bank of India said today in its annual report on the banking sector for the year ending June 2008 the slowdown in the industrial sector will negatively affect profitability of the corporate sector and credit risk.

The bank said there were downside risks from India as the country is increases its integration in global economy controlled by the U.S. and Western Europe from sustained outflow of capital, financial contagion and slowing world growth.

Gainers & Losers

Satyam fell 31% after investors dumped the stock on corporate governance concerns however, Infosys rose 1.5% to 1,139.80 rupees and Wipro rose 1.5% to 243 rupees.

Tata Consultancy Services fell 0.8% to 477.10 rupees after the rupee strengthened to 47.32 against the dollar from 47.92 yesterday.

Accentia Technologies rose 2.1% after it secured an order worth $22 million to service a chain of hospitals in the U.S.

Reliance Industries declined 2.6% to 1,350.15 rupees on the worries that oil prices may rise faster than refined crude products prices.

ONGC rose 0.4% after OPEC readied to cut production to record lows to forestall dropping prices.

Crude oil for January delivery rose to $44.50 a barrel.

Hindustan Petroleum Corporation increased 3.8% on the news that it is in talks with two overseas oil firms for joint participation in the $10 billion refinery-cum-petrochemical project at Vizag in Andhra Pradesh.

BPCL gained 0.5% and Indian Oil Corporation dropped 0.3%.

Financial stocks rose on expectations lower interest rates will promote lending. HDFC Bank rose 1.8%, ICICI Bank edged up 2.4% and State Bank of India slid 3% to 1201.25 rupees.

Bharat Forge advanced 0.6% on news that the company and Alstom based in Europe have finalized the site for setting up a manufacturing facility for power equipments.

Kesoram Industries lost 7.3% after closing its tire manufacturing unit in Orissa for 14 days to avoid inventory pile up. The company has high debt on its balance sheet.

ACC fell 9.2% after closing one of its kilns at Gagal in Himachal Pradesh. Gammon Infrastructure Projects gained 1.4%.

ABG Shipyard fell 7.6% on reports that orders worth 1,000 crore rupees may be cancelled.

Country Club India rose 3.3% ahead of its board meeting on Friday to consider rights issue of equity shares.