The same brokerages which had continued to recommend buy on the company were dumping it on Wednesday after revelations of fraud.
A clutch of brokerage firms, including Credit Suisse, Religare and Angel Broking have suspended monitoring Satyam Computer Services, taking their eyes of a company they used to cover as a darling technology pick.
“We suspended today equity research coverage of this stock, following the announcement by Satyam, as the current financials of Satyam cannot be relied upon, we are unable to issue further investment advice on this stocks,” Credit Suisse said.
Religare’s Hitchens Harrison called Satyam’s fraud disclosures “shocking and overwhelming”.
Incidents like this, in an already dull and bearish economic environment, could have a prolonged impact on trade and sentiment. “The incident, the affect of which will be felt over the medium-term, has come as a shocker to both domestic and global investors,” said Hitesh Agrawal, Head, Research, Angel Broking, adding, the case has put corporate governance and accounting practices under focus.
“While India continues to rank high in terms of corporate governance amongst its peers, recent developments will have an impact on the perception about corporate governance levels in India,” said Sukumar Rajah, CIO, Equity, Franklin Templeton Investments, India. Rajah believed that the development would have a short-term negative impact on market sentiment.