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IT stocks crash on World Bank ban

January 12, 2009 15:28 IST
Last Updated: January 12, 2009 18:53 IST

The stocks of IT companies on Monday took a beating at the bourses amid earning concerns and after the World Bank barred two other software services firms besides Satyam [Get Quote] Computer from doing business with it.

This disclosure by the World Bank was a negative trigger for the IT firms except Satyam Computer, which was trading in the positive zone, following the government intervention in the company and appointment of a new board.

Most of the constituent of the BSE IT index registered losses ranging from 1 to 10 per cent amid the World Bank disclosure that action has been taken against a total of five entities in India, including Wipro [Get Quote] Technologies and an individual.

                                        The Satyam fiasco: Complete coverage

"Most of the IT stocks suffered today amid the disclosure made by the World Bank and concerns of quarterly earnings announcement," Arun Kejriwal of Kejriwal Research and Investment Services said.

Wipro, which was barred by the World Bank for four years beginning June 2007 for "providing improper benefits to Bank staff" was the hardest hit.

Wipro Technologies on settled for the day with a fall of 9.30 per cent at Rs 227.35. Meanwhile, Megasoft which was also barred for an identical period beginning December 2007 for "participating in a joint venture with Bank staff while also conducting business with the Bank" ended the day with a dip of 0.63 per cent.

Earlier in the day Megasoft dipped 13 per cent to witness an intra-day low of Rs 13.80 on the BSE, while Wipro fell over 12 per cent to witness an intra-day low level of Rs 220.

"The stock of Megasoft recovered its early losses largely due to the fact that the value of the stock is very less. It is not widely owned by foreign investors, besides it is not part of the F&O segment as well," Kejriwal added.

Earlier, Satyam, which was debarred for eight years beginning September 2008, had demanded an apology for making public its name and withdrawal of what it called "inappropriate" statement by the Bank. The Bank had refused to apologise.

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