When the stocks of IT company Satyam closed at below Rs 25 on Friday, there was little hope that the stock would recover. But swift government action over the weekend seems to have worked some magic.
The beleaguered stock saw a rally in a market that was otherwise weak on Monday, on the optimism that the government-appointed board would revive the company.
"The rally came on the back of the government moving swiftly over the Satyam issue and installing a board with a credible team of members,” said Hitesh Agrawal, Research Head, Angel Broking. “This has been an important move for the stock since just last week after what transpired at the company, analysts were not sure of where the stock was heading.”
He added that even though it was difficult for the stock to regain its lost glory, the government was at least trying to salvage the situation and that was an encouraging sign.
Satyam closed at Rs 34.70 gaining Rs 10.95 over its previous close, even as both the Bombay Stock Exchange Sensex and National Stock Exchange Nifty dipped — by 299.16 and 104.30 points respectively — at the day's close.
"Though the rally in Satyam could be based on speculative intent for now, it is heartening to know that governance is coming back to the company.,” said Sandesh Kirkire, CEO, Kotak Mutual Fund. “However, as fund managers we don't hold a position in Satyam and would like to wait and watch what happens at the company before we make any commitments in it now.”
Agrawal too sounded a word fo caution: “There's still too much of uncertainty in the company as well as the stock and in the short-term investors will refrain from buying the stock.”