Mahindra Satyam has announced today evening that they are going to file delisting of Satyam Computers ADR from New York Stock Exchange(NYSE). This news has come off as a shock to the investors of Satyam Computers ADR as well as Mahindra Satyam listed in BSE/NSE. However we did not see the major sell off here in Indian stock market because the news came off in the evening when our markets were closed already. I won’t be too surprised that today’s 6% fall was because some people had got the information already about the upcoming delisting news in the evening and so those people already sold off.

The hard fact that you have to bear is, Mahindra Satyam will fall big time on Monday, the sell off will begin right at 9:00am with the market opening bell. We are expecting the stock to fall back to 80 levels right on monday, and several people who could not sell on monday might try to exit on Tuesday causing the stock to drop to 70′s. However IF the results are good, the stock might bounce back, but that is a lot of risk you will have to take, since you don’t have a clue about results, and sitting on a loss, if by chance results do not meet the market’s expectations, then there will be limitless sell off on the stock. Is it really worth the risk?

NYSE Demanded A lot?

NYSE had asked Satyam to give results details about each quarter since the last results date and that was a lot to ask for. Mahindra Satyam knew that they will not be able to meet the deadlines, so before they are kicked out of NYSE with hefty fines, they are themselves applying for delisting to avoid any further problems from NYSE. But the point is, nobody cares a damn about if the delisting is in favour of the company or not. Sentiments say “DELIST???”, such a word can never be good, so sell all your shares as soon as possible and don’t risk it. It will be used as an excuse to get out of the stock.

Why this announcement before the results?

My point still stands that if Mahindra really wanted to get delisted in NYSE, why did they announce this news before even the financial results had come out? Could Mahindra not have waited to show their results and then made any such announcements? Didn’t they know that the news will come off as a shock to all of the share holders and they will all try to exit the stock on monday?

There was already black clouds roaming over Satyam company and now these kind of news will further dishearten the shareholders. Now nobody would want to risk their money onto a company that was scam hit, then when everyone was positive again on the stock, a de listing news was thrown on their face. This news has come off as nothing more than a slap on the investor’s faces.

Did Mahindra Play A Game?

I’m inclined to feel that Mahindra played a game with the shareholders’ money. They had to merge Satyam and Tech Mahindra and they wanted to take as much shares off Satyam and give the least in return in Tech Mahindra. Whether this is true or not, the fact still remains that now all the share holders of Mahindra Satyam will have sleepless nights this weekend. Monday is going to see a sharp decline on this stock, and thereby creating more panic among the stock holders. Today Satyam ADR has already fell 30% on back of this stupid news.

Now I’m having second thoughts about company’s results that are going to be announced on Wednesday as well. Whatever be the case, I will exit from the stock on Monday morning. If the stock is really going to fall, then I better pick it up at lower levels than the levels I’m currently holding onto.

Related posts:

1. Buy Mahindra Satyam Stock
2. Mahindra Satyam Results
3. Hold Mahindra Satyam Stock
4. Avoid News Based Rallying Stocks