Dalal Street Investments

Massive Sell of in Indian IT triggerd by Lehman + Merill Woes

September 16, 2008

The filing of Chapter 11 by Lehman Bros and Bank of America’s buyout of Merrill Lynch has increased concerns about the possible impact on Indian IT leading to a sharp sell-off. Prima facie, expect a 2-3%/4-5% negative impact on FY09E/FY10E US$ revenues if the US financial sector continues to show more problems.

Lehman is not a big customer for any of the large Indian IT companies. Merrill is a big customer for Satyam and TCS and Bank of America is a big customer for TCS and Infosys. There could be some impact on Satyam over the coming 2-3 quarters.

Goldman Sachs just minutes ago removed Satyam Computers from favorite growth list due to stop loss. Satyam is down 15.4% since its addition to the favorite growth list on July-31, 2008, exceeding stop loss limit, vs. the S&P 500 down 5.9%.


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