Satyam appoints DSP ML to find out strategic options

Its resembling a can of worms out there, everyday you get some fresh news which is not quite positive, the deferment of the buyback meeting will also come as a bit of a disappointment, so I wont be surprised if the stock reacts once this morning at least. What we are seeing is that every time the stock goes sub-120 kind of levels there is a bit of value buying which is happening on the margin and also some of the savvy players or traders in the market might be accumulating below that level in the reasonable expectation that there will be some corporate action very soon because the promoters are in a corner.

Some of the institutions want to bail out and from very reliable sources in the market we hear that, some of the smart guys are sniffing out on opportunity in Satyam, so a deal is likely to happen. The way this will end is probably the promoters will sell out their stake, some large strategic buyer will end up buying a significant quantity of stock there, will probably even go on to make an open offer because the stock price in pure value business terms is fairly repressed and if you have a credible promoter taking over, then Satyam should have no reason to trade at Rs 120-130 levels, so some people might be accumulating in that hope.

Do remember that Satyam has appointed that DSP Merrill Lynch to find out strategic options and I would infer that they are willing to sell promoter stake down and hand Satyam over to another company or entity. The other technical issue right now which is probably a bit of an overhang is the 60 lakh shares which IL&FS trust sold on Wednesday and the clarification from the management that the promoter group has pledged all its shares which is about 5.5 crore to companies like IL & FS Trust and they might be liquidating because of margin calls.

These trustee investment or financing companies' hold 5.5 crore shares, not more than a crore shares have come into the market, so if Satyam continues to slip, and that stock comes into the market that might put a lot of pressure technically in the near term, I don't know how much of it will be soaked up, so there are some technical and sentimental overhangs on the stock no question about it but the more important medium term call you want to take is what happens eventually what is the end game to the saga, and the end game is something which might not be terribly detrimental to share holders, I suspect however much time it takes a few weeks may be but we will probably find  a new entity in the helm of Satyam after this and the promoter will probably go and at that point you will even get a technical pop like open offer triggers, so below Rs 120 and closer to Rs 100 I still see people accumulating that stock because of these possibilities that exist out there but for near term there are technical issues like this pledged stock which was disclosed on Saturday.