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Shares in Satyam Computers, the Indian software company engulfed by the country’s biggest-ever corporate fraud investigation, climbed 45pc after the government appointed a new board to decide on its future.

The three-person board, led by Deepak Parekh, chairman of the Housing Development Finance bank, will look at options including a break-up of Satyam, to give staff and clients some certainty over the future of the company. They will then begin restating the company’s earnings, which chairman Ramalinga Raju admitted last week had been falsified for years.

The new board will also look at how much cash Satyam has to pay wages and complete contracts.

Satyam’s shares were hammered by the revelations, and the value of the company dropped to $330m (£218.9m) at the end of last week from more than $7bn six months ago.

Police in India also said over the weekend they had detained the chief financial officer of Satyam as part of the alleged $1bn fraud investigation.   - read more about satyam scandal

MUMBAI: The Bombay Stock Exchange benchmark Sensex tumbled nearly 300 points on Monday, the third time in a row, on aggressive selling by funds,
weak opening in European stock markets , and the World Bank debarring more software companies, including Wipro, till 2011.

The Sensex, which had been falling in the last two trading sessions after the Satyam Computer fraud came to light, fell further by 296.42 points at 9,110.05. It touched the day’s low of 9,024.45 and a high of 9,331.13 points.

The 50-share National Stock Exchange index Nifty fell 99.90 points at 2,773.10, after touching a low of 2,748.55.

Wipro, the third software producer and a component of the key index, fell 12 per cent soon after the World Bank barred the company from direct contracts until 2011, citing a conflict of interest. The stock ended with a fall of Rs 23.30 at Rs 227.35.

The government’s moves to put the beleaguered software firm back on track failed to lift the broader markets, as negative global cues weighed on the investor sentiments.

The government’s moves to put the beleaguered software firm back on track failed to lift the broader markets, as negative global cues weighed on the markets. Asian stock markets
retreated on Monday as a jump in US unemployment intensified concerns the global economy is facing a prolonged slump.

The Sensex is down 135 points to 9,271 while Nifty has shed 50 points to 2,822 level.

“Markets still remain in a bearish trend,” said Ajay Bagga, chairman of Financial Planning Standards Board of India. On Satyam, he said that the IT company’s brand image has been tarnished and the extent of liabilities needs to be figured out. However, the stock has rallied over 50 per cent after the government appointed three members to Satyam Computer’s board.

In a setback to another IT stock, Wipro, it is down nearly 4 per cent after Wipro disclosed that it can’t contest World Bank contracts for 2007-11.

Source  /courtesy: NDTV profit 

All about Satyam scandal / scam at www.ghotala.in

MUMBAI (Reuters) - The BSE Sensex is expected to start lower on Monday, tracking weaker regional markets, but Satyam Computer Services Ltd could bounce after the government appointed a three-man board to restore confidence in the scandal-hit outsourcer.

“Whatever shares had to be sold have already been sold and now with the old board out and a new board in, foreign investors will feel encouraged to invest in the stock and in the Indian market,” said Arun Kejriwal, director of Kris Brokerage.

An accounting fraud, revealed by chairman and founder Ramalinga Raju last Wednesday in a stunning resignation letter, has battered Satyam shares, with its market value plunging to $330 million at Friday’s close, against more than $7 billion just six months ago.

Bigger rivals Infosys Technologies, which reports December quarter result on Tuesday, Tata Consultancy Services and Wipro are expected to be in focus on a

perception they could benefit from problems in Satyam.

However, the main BSE index, which fell 5.5 percent last week to 9,406.47, could ease on concerns the Satyam scandal could trigger tighter regulations. Foreign funds sold $262 million worth of Indian equities on Wednesday following Satyam’s revelations.

Read  about satyam scandal at www.ghotala.in