Infosys down as investors fret over U.S. scrutiny

A trader speaks on phones while trading at a stock brokerage in Mumbai March 22, 2010.

Reuters Market Eye - Shares in Infosys(INFY.NS), India's No. 2 software services company, fell over 3 percent on news that the company is under scrutiny from U.S. authorities for likely errors in employer eligibility documents of its staff.

"We believe that if the DHS concludes that there has been a systematic policy of misuse/violation of visas, there could be penalties or other strictures that could be imposed," Nomura said in a note, referring to the U.S. Department of Homeland Security.

(To read Infosys staff documents under U.S. scrutiny, click here)

The new development will add to concerns as the company will go on trial in August for alleged visa misuse and the current development may strengthen the case, Nomura said.

It also comes on the back of disappointing earnings on April 13, where the company disappointed investors with a weaker-than-expected revenue growth outlook for the current fiscal year.

Infosys, in a statement, said that any government action could materially and adversely affect its business and results of operations.

"We believe this is a negative development," Nomura added.

(Reporting by Manoj Dharra; Editing by Subhadip Sircar)