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IT stocks nosedive on World Bank ban

Stocks of IT companies, including Wipro and Megasoft, took a beating at the bourses after it was revealed today that the two firms were barred from doing businesses with the World Bank.

business Updated: Jan 12, 2009 15:29 IST

Stocks of IT companies, including Wipro and Megasoft, took a beating at the bourses after it was revealed on Monday that the two firms were barred from doing businesses with the World Bank.

Shares of Wipro Technologies and Megasoft were trading in the negative zone and registered losses up to 13 per cent and 12 per cent, respectively on the BSE.

Megasoft dipped as much as 13 per cent to witness an intra-day low of Rs 13.80 on the bourses, while Wipro fell over 12 per cent in morning trade to witness an intra-day low level of Rs 220.

Besides, Satyam Computer, Wipro was on Monday barred for four years beginning June 2007 for "providing improper benefits to Bank staff", Megasoft was barred for an identical period beginning December 2007 for "participating in a joint venture with Bank staff while also conducting business with the Bank." This disclosure by the World Bank was a negative trigger for the IT firms except Satyam Computer, which was trading on the positive zone, following the government intervention in the company and appointment of a new board.

The IT index of the BSE on Monday recorded a dip of 4.18 per cent to an intra-day low of 2,042.72 points. The index was later quoted at 2,082.77 points, a dip of 2.31 per cent from its previous closing price.

Commenting on the World Bank action, Wipro said in a statement this morning: "Our inability to get future business from World Bank will not adversely affect our business and results of operations." Megasoft officials too said that the debarment will not have no revenue implication for the company.