Indian new-age tech stocks slumped this week in line with the fall in the broader market due to mixed earnings reports of companies in Q2 and geopolitical tensions.
Eleven out of 18 new-age tech stocks under Inc42’s coverage fell between 1% and 9% this week, with newly-listed Zaggle becoming the biggest loser by falling 8.7% on the BSE.
Among the other losers were Tracxn (down 7.8%), Yatra (down 7.5%), EaseMyTrip (fell 2.8%), and Nykaa (down 2.1%).
However, Paytm continued its bull run this week despite the pressure in the market, helped by improved sentiment and expectation of strong Q2 FY24 earnings, which the company released after market hours on Friday (October 20)
Paytm emerged as the biggest winner this week by gaining 5.8% on the BSE, followed by RateGain (up 5.1%).
Yudiz, Zomato, DroneAcharya, ideaForge, and Delhivery were the other gainers that moved up in a range of 0.5% to over 4% this week.
In the broader market, benchmark indices Nifty 50 and Sensex fell 1.06% to 19,542.65 and 1.34% to 65,397.62, respectively, this week, falling in three consecutive sessions.
Vinod Nair, head of research at Geojit Financial Services, said that escalating tensions in the Middle East and elevated US bond yields led the market to a consolidation path this week.
“A weak start to the earnings season, disappointment from the IT sector, and a mixed bag of results from banks influenced investors to book profits from the table. FIIs continued to withdraw funds as the US Fed Chair emphasised the imperative for continued monetary tightening policy and holding interest rate high,” he said.
Nair expects investors to remain cautious in the near term due to concerns about the long-term implications of geopolitical tensions in the Middle East.
In the coming week, market participants will monitor the US GDP data for insights into the Fed’s interest rate trajectory. Additionally, as the earnings season gains momentum, investor sentiment will be shaped by the management commentaries of the companies and bottom-up investment approach, he added.
Echoing a similar tone, Shrikant Chouhan, head of equity research (retail) at Kotak Securities, said markets worldwide, including India, would respond to geopolitical challenges, oil prices, and bond yield fluctuations.
Now, let’s understand better how some of the new-age tech stocks performed this week.
The 18 new-age tech stocks under Inc42’s coverage ended the week with a total market capitalisation of $39.08 Bn as against $38.74 Bn last week.
Paytm’s Strong Q2 Show
Shares of Paytm continued to surge this week, largely driven by the market expectations that the fintech major would report improved growth in Q2.
Paytm shares gained in all five sessions this week, rising 5.8% to end Friday’s session at INR 987.35 on the BSE.
The company reported its financial statement after the market closed for the week and posted a 49% year-on-year (YoY) decline in consolidated net loss to INR 291.7 Cr in the September quarter.
Its operating revenue also increased 31% YoY to INR 2,518.6 Cr.
Sequentially, too, Paytm saw improvement in its top and bottom lines.
Helped by improving investor sentiment, Paytm shares are already trading 50% higher compared to six months ago.
Commenting on the stock, Jigar S Patel, senior manager of technical research at Anand Rathi, said that though the trend is bullish, investors should remain cautious on the stock given it has already given phenomenal returns in the last few months.
“We need to wait and watch if the stock is sustaining above INR 980-INR 990 level, after that we can see an upside till INR 1,020-INR 1,030 next week,” he said.
Zomato Partners With IRCTC
Shares of foodtech major Zomato rose over 2% this week amid volatility, ending Friday’s trading session at INR 113.4 on the BSE.
While the stock has been on an upward trend over the last few months, let’s try to understand what might have affected its share movement this week.
In The News For:
Indian Railway Catering and Tourism Corporation (IRCTC) announced a partnership with foodtech major Zomato earlier this week for delivery of pre-ordered meals on a pilot basis.
As per a report, SoftBank might offload another 1.1% stake in Zomato for at least INR 1,023.6 Cr ($123 Mn).
Anand Rathi’s Patel said there is a bearish kind of diversion in Zomato’s stock movement right now. So, investors should look to book profit in the INR 110-INR 120 zone.
Patel added that the support for the stock is near INR 105, followed by INR 100, while resistance is near INR 115, followed by INR 120.
EaseMyTrip Remains Under Pressure
In 2022, when most new-age tech stocks, including Zomato, Paytm, Nykaa, and PB Fintech, witnessed bloodbath, EaseMyTrip stood out as the most resilient one in the pack. However, the trend has reversed this year.
While many new-age tech stocks have been rallying this year, shares of EaseMyTrip are trading almost 24% lower year to date. Every short-time rally in the stock has been followed by a sharp decline in share price this year.
This week, the traveltech platform’s shares slumped almost 2.8%. While the stock rose in the first session of the week, it fell in the next four sessions and ended Friday’s trading at INR 40.13 on the BSE.
The company also made a few new announcements over the last week or so. Last week on Friday, it announced the launch of a dedicated platform for spiritual tourism in India, named EasyDarshan.
This week, it made announcements around discounts. EaseMyTrip said it has partnered the Imperial Society of Innovative Engineers (ISIE) for Formula Imperial 2023 and Indian Karting Race 2023. The platform will offer travel discounts to participants of these sports events.
Besides, it also announced ‘Dussehra Travel Sale’ under which travellers can save up to 4% on flight bookings, up to 53% on hotel stays, and up to 12% on cab reservations.
Meanwhile, EaseMyTrip also became the official associate partner of the World Tennis League for the second consecutive year.
It must be noted that the company’s profit took a hit in Q1 FY24 due to a sharp rise in customer discounts.
Anand Rathi’s Patel said that an upward trend for the stock is now possible only above INR 45 level, where the stock is facing strong resistance.
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