The lie has been exposed. The stocks have taken a tumble and the investor and speculator are both plumbing bottomless depths having bought shares of Satyam Computer Services. The herd mentality got Mohsin Attari, a communications professional, tempted to buy Satyam shares. A novice, with no previous experience of the stock market or even an inkling about its workings, Attari was goaded by his friends to buy Satyam shares in December 2008. That was when the share was priced at Rs 270. ?I bought around 1000 shares, one half at Rs 270 and another at Rs 280.? A colleague, who is an investor in shares asked him why he was buying Satyam shares. ?Don?t invest in stocks,? he was told. Invest in companies by reading the balance sheet. ?But you know how it is,? says Attari, with a hint of laugher in his voice. ?The company was rated among the best in India. I thought I could make a neat profit and later exit safely.?
Attari informs that his impulsive buying was the result of ?news? he had heard: Satyam Computer Services was going to make an important announcement. ?The announcement did come. It was about the Maytas scam.? Attari says, ?the share price nosedived to Rs 113 in a week?s time but then notched up to Rs 173. I decided to get out when the going was good. I exited when the share was priced at Rs 183,? says Attari.
If a man like Satyam chairman B Ramalingaa Raju can turn out to be a fraud, whom does one trust now, asks Attari. ?My parents were horrified with my decision to buy shares. I thought I would surprise them with a windfall on my first investment but I am still recovering from my impulsive decision,? adds Attari.
The media is a lot to blame, feel some investors. ?The media goes all out to give wide publicity to promoters and their companies,? says Annie D?Souza, a consultant. ?A company does well and then you have media singing hosannas to the promoters and their family trumpeting their so-called goodness, intelligence and most readers get taken up by it. I bought 700 shares of Satyam a year ago and now I am sitting with some worthless paper in the name of Satyam. Middle class Indians like us are prudent and think a lot before investing our little fringe moolah. And see where it gets us?? D?Souza has sworn off IT shares for the present. ?I don?t want to stop buying shares altogether.?
For some long-term investors like Prakash Padikkal, who bought Satyam shares two years ago, the news that the balance sheet was inflated was a shocker. ?I invest in the market after reading a company?s balance sheet. Only when I am convinced by the balance sheet and consult my broker do I invest. How am I supposed to know that the balance sheet, audited by a reputed firm, is inflated?? He says, the government should provide a guarantee against such malpractices by providing insurance to investors. ?Regulatory authorities should be more vigilant and should bring in new regulations to weed out such happenings in the future. Severe punishment should be meted out to such companies and their auditors and should be severe enough to deter future fraudsters.? Would he sell his shares of Satyam now? ?No,? he says.
The impulsive who have been taken in by the price fluctuations in the market and purchased Satyam shares in bulk are now regretting their decision. Like Ravi Alwar, a 26-year-old professional. ?I bought Satyam shares as my friends said it was the best time to invest in IT stocks. From Rs 280 at which I bought the shares, I refused to sell it when the prices plummeted to half the price in the hope that since it was amongst the best IT companies in the country, it would recoup. At the current prices of the shares, I don?t know whom to curse ? the company and its promoters for being such scamsters, or myself for being so gullible.?
Some investor forum have taken proactive action to prod the investors awake and also seize the government to issue guidelines. Kirit Somaya, president, Investors Grievances Forum says the Forum has registered its complaint with Economics Offences Wing. ?We have sent legal notices to Sebi, NSC, Institute of Chartered Accountants. We have questioned the government as to why they have not arrested Mr Raju yet? Why is the government delaying action against the Satyam management? In Global Trust Bank scam, which took place some years ago, the auditors were again PwC. The RBI had suspended GTB then. I strongly feel that the PwC membership should have been be suspended and whatever audit they do should be rechecked. We will wait up to Monday or will be forced to move the Mumbai High Court and file a PIL on this issue. Our demands are : The properties of the promoters and their sister concerns, listed and unlisted should be freezed and the auditors also should be freezed and given to small investors. I feel this is the beginning of the worst in India for the capital market bubble was created by vested interests and the government was witnessing it. Satyam is the first and not the last. Real estate companies will be the next to follow, I feel. Investors should protest with the government, the management and not remain silent spectators. There are several provisions in the law and investors should take action and not be carried away by bogus promises. When the government can come out with various bail out packages for promoters, then why not for small investors?? Well, are those in government paying heed?