The Dalal Street is likely to remain subdued this week following the Satyam fiasco and the Securities and Exchange Board of India’s (Sebi’s) decision to review earnings of other Sensex and Nifty companies coupled with negative global cues, according to analysts.
The benchmark indices had suffered the impact of the plunge in the Satyam scrip after the country’s biggest corporate scam was unearthed. While the Sensex lost 551.75 points or 5.54 per cent to settle at 9,406.47, the Nifty slipped 173.75 points or 5.70 per cent to 2,873 on Friday. The Satyam scrip nosedived to hover at the Rs 20 level from around Rs 178 after its Chairman and founder Ramalinga Raju tendered his resignation, confessing to fudging the company’s accounts.
Analysts believe the scandal is likely to lead to probes into other family-owned businesses, which may have turned a blind eye to the corporate governance norms in the country, although the same will be in the interest of the investors.
Sebi in its efforts to avoid a Satyam-like financial fraud had decided to review the earnings statement of all companies that figure in the elite stock trackers Nifty-50 and Sensex-30. The regulator had said that such a review would be in relation to the last quarterly results and last audited annual financial results. “The market is likely to remain weak as developments both on the foreign and home fronts are negative... Investor confidence has been dampened because of Satyam and global markets are also falling, which may act as a double whammy for the domestic market,” Ashika Stock Brokers’ Research head Paras Bothra said.
SMC Global Vice-President Rajesh Jain said that the market has lost its momentum because of the Satyam fiasco and the overall drop in US markets and the domestic market would remain under pressure as the selloff is still continuing on American bourses. Further, marketmen also believe the negative outlook on the quarterly earnings of companies, which will kick-start with the results of Infosys on January 13, may also impact the market spirit.