Shares of Infosys tanked more than 16% on Tuesday, a day after the company said that it received an anonymous whistle blower letter alleging unethical practices by the top brass to boost short-term revenues and profits.
Infosys was the biggest loser among the Sensex pack, shedding 16.21% or ₹124.45 to close at ₹643.30. Earlier in the day, the shares touched a low of ₹638.30.
For the country's second-largest software services company, this was the biggest single-day fall in over six years. It had lost over 21% on April 12, 2013 after its revenue growth forecast was much below industry guidance.
Incidentally, the huge losses in the index heavyweight weighed on the entire market as well with the benchmark indices snapping their six-day gaining streak.
The 30-share Sensex lost 334.54 points, or 0.85%, to close at 38,963.84. The broader Nifty ended at 11,588.35, down 73.50 points or 0.63%.
Market participants believe that the stock will be under selling pressure as investors are typically wary of taking positions in companies facing such issues.
“This equates to a corporate governance issue,” said Harit Shah, Research Analyst, Reliance Securities.
“Given that it is so widely held, it is very likely that some investors will vote with their feet and sell at least some of their holdings,” he added. Motilal Oswal Financial Services highlighted the fact that Infosys has found itself at the centre of whistleblower complaints five times in the last 10 years.
