Market may extend losses

The market may extend Wednesday's (7 January 2009) sharp losses as softwaere major Satyam Computer's accounting scandal in excess of Rs 7000 crore has created shock and awe among the Indian and global investing community. Satyam's erstwhile chairman B Ramalinga Raju's startling admission that the company's books of accounts were doctored and profits inflated, triggered a 7.2% fall in the Sensex on Wednesday. After the Satyam saga, investors will have lesser confidence in Indian companies especially the ones with suspect corporate governance practices. That in turn could affect inflow of foreign funds in India.

Institutional investors pressed heavy sales of Indian stocks on Wednesday, when the Satyam's announcement of the accounting fraud. As per the provisional data released by the stock exchanges, foreign institutional investors (FIIs) dumped shares worth Rs 1,111.25 crore and domestic funds sold shares worth Rs 505.49 crore on Wednesday.

Meanwhile, the stock exchanges have removed the Satyam stocks from their key benchmark indices. The BSE said Sun Pharmaceutical Industries will replace Satyam in the barometer index BSE Sensex with effect from Monday, 12 January 2009. The NSE said Reliance Capital will replace Satyam in the S&P CNX Nifty with effect from 12 January 2009.

Asian stocks were mixed on Friday, 9 January 2009, with investors bracing for the December 2008 US payrolls data, expected to show sharp job losses and deal another blow to hopes for a speedy recovery this year.

Most US stocks rose on Thursday, 8 January 2009, after news that Citigroup Inc agreed to support legislation aimed at stemming home loan foreclosures, offsetting Wal-Mart's disappointing sales and outlook. The Dow fell, however, led down by a 7.5% decline in Wal-Mart as the discounter's sluggish December 2008 sales signaled another downturn in consumer spending, reviving fears of a prolonged recession.

The Dow Jones industrial average was down 27.24 points, or 0.31%, to 8,742.46. The Standard & Poor's 500 Index was up 3.08 points, or 0.34%, to 909.73. The Nasdaq Composite Index gained 17.95 points, or 1.12%, to 1,617.01.

Citigroup's reported backing of legislation that would bring relief to struggling borrowers brought on board the support of one of the largest US retail financial institutions -- seen as a key move in winning support for the bill.