Shares of Satyam plunged in early trade, dragging down Sensex. By 0500 GMT, the stock was down 22 per cent at 23.30 rupees, after sinking as low as 20.55 rupees. India's benchmark stock index fell 3.5 per cent.

"People are realising there is no bailout package. So people who have bought it before are dumping it," said Arun Kejriwal, director of Kris Research.

Local media had estimated the government may have to pump up to 20 billion rupees ($410 million) into Satyam to keep it afloat and reassure its nervous customers and employees.

Satyam has 53,000 workers and counts global corporate giants such as Nestle and General Electric as clients.

So far, it has not reported losing any customers over the billion-dollar fraud, but its business was already under pressure before the scandal as recession stalked many of its key markets, forcing companies to review or cut spending.

"It will take time for a proper recovery for the company, at least 2-3 months," said R.K. Gupta, managing director at Taurus Asset Management in New Delhi, who expects the stock to breach the previous low of 11.50 rupees it reached on Jan. 9.

Satyam appointed two new audit firms on Wednesday to examine the full extent of the fraud, find out how much cash it really has and restate its financial results.

India's prime minister met key ministers on Tuesday to discuss Satyam, and corporate affairs minister PC Gupta later said "different possibilities" were being examined.

The board was working towards making Satyam financially viable before considering any sale or merger, the paper said.

Satyam's founder and chairman Ramalinga Raju quit last week after confessing profits had been falsely inflated for years.

Raju, 54, his brother and the company's former chief financial officer have been charged and are in custody in the southern Indian city of Hyderabad, where Satyam's headquarters is located.

The scandal has hit Indian stocks and the currency, as investors worried over the damage to foreign investment in Asia's third-largest economy and the once-booming outsourcing sector.