Investor angst takes its toll on Satyam; shares down 30% shares of Satyam Computer were at the receiving end of investors’ angst over a planned deal to enter the real estate business.

Satyam opened down 16.1% and extended losses to 30% as investors reacted negatively to a plan to pay $1.6 billion for control of a related construction and a real estate firm. Satyam abandoned the deal after its shares fell 55% in New York.

“Satyam’s decision to call off the Maytas deal is welcome. The stock, however, may still get bruised as in the conference call to justify their acquisition of Maytas, they had painted a gloomy picture of their IT prospects. The FIIs and the non-management shareholders should get together now and buy the 8.5% shareholding of the management and sell that stake to an established player, either Indian or foreign,” said VK Sharma of Anagram Stock Broking.

Tuesday’s unusual turn of events began after the close of India’s stock markets when Satyam said that it planned to enter the depressed construction industry by buying all of privately held Maytas Properties for $1.3 billion and 51% of builder Maytas Infra for $300 million.

Satyam founder and Chairman B. Ramalinga Raju and other insiders hold 36%in Maytas Infra and 35 percent in Maytas Properties. percent of builder Maytas Infra for $300 million. The two are builders that work on infrastructure projects including highways, ports and water treatment systems. Satyam helps develop software for other businesses.

Analysts questioned the motives of Satyam’s top executives, saying there was a potential conflict of interest because they hold stakes in both companies. They also said the acquisitions made little sense at a time when technology outsourcing companies are preserving cash to help weather the global economic slowdown.

The company’s stock recovered some of its losses after Satyam withdrew the offers, climbing 50% in after-hours US trading. But analysts said that Satyam may not be able to win back the confidence of investors.