2024 Lok Sabha Election Results: New-Age Tech Stocks Lose Over $2 Bn In M-Cap In A Day

Investors in new-age tech stocks saw over $2 Bn of their wealth getting wiped off in a day as the broader domestic equity market witnessed a bloodbath amid the unexpected results of the 2024 Lok Sabha elections on Tuesday (June 4).

The total market capitalisation of 23 new-age tech stocks under Inc42’s coverage fell to $50.23 Bn at the end of today’s trading session compared to $52.38 Bn at the close of trading on Monday. 

All 23 new-age tech stocks ended in the red today, in line with the crash in the benchmark indices as the ruling Bharatiya Janata Party (BJP) was seen falling short of the majority mark. In fact, Sensex crashed over 6,000 points intraday today.

Eventually, Sensex ended today’s session trading 4,390 points, or 5.74%, lower at 72,079.05 and Nifty50 closed 1,379 points, or 5.93%, lower at 21,884.5. 

Gaming major Nazara emerged as the biggest loser among the listed new-age tech startups, with its shares nosediving 14.1% to INR 677.25 on the BSE.

It was followed by Mamaearth, which crashed 9.19% to INR 416.1, becoming the second-biggest loser among the new-age tech stocks. 

With a sharp decline in the banking stocks, shares of Fino Payments Bank fell 7.54% to INR 255.75 on the BSE today, 

Shares of Delhivery tanked 7.5% to end the session at INR 360.65. Amid the broader market pressure, Paytm hit the lower circuit by falling 5% to INR 357.2 today.

Go Digit saw the lowest decline at 1.4%, followed by Zomato falling 1.71%. 

It is pertinent to note that Sensex surged 3.39% to 76,468.78 and Nifty50 zoomed 3.25% to 23,263.90 on Monday, as most of the exit polls projected the Prime Minister Narendra Modi-led National Democratic Alliance (NDA) getting a comfortable majority in the Lok Sabha. 

As a result, 14 out of the 23 new-age tech stocks gained in the range of 0.7% to about 13% amid the rally yesterday, with Nazara Technologies rallying 12.3%.

As per the data available on the Election Commission of India’s website as of 06:35 PM, the BJP is the single-largest party with wins and leads in 241 seats. However, this is short of the majority mark of 272 and it would require the support of its allied parties to form the next government.

What Does The Broader Market Suggest?

While it is yet to be seen what the trajectory of the new-age tech stocks look like from here on once the broader market stabilises, analysts estimate the overall market to trade sideways in the near term.

Vinod Nair, head of research at Geojit Financial Services, said that the unexpected outcome of the general election sparked a wave of sell-off in the domestic market.

However, the expectations of the BJP-led NDA forming the next government should mitigate any substantial downside in the medium term, he said.

“This is likely to lead to a major shift in political policy with a focus on social economics, which will have a positive effect on the rural economy. Alongside, the sectors that have topped in the past five years, including power, capital goods, real estate, and industrials, are advised to exercise caution in the near term,” said Nair.

Meanwhile, international brokerage UBS said in a research report today that India’s valuations have been expensive from the perspective of its “ordinary” corporate earnings growth and outlook. 

One of the arguments behind India’s rich valuations could have been the political stability and policy certainty that the government gave, but these assumptions could come under question now, it stated.

On the other hand, brokerage Bernstein reiterated its overweight rating on sectors including telecom, healthcare, and durables and a mild overweight rating on tech stocks. 

However, it is on the sidelines with an equal-weight rating on autos, building materials, consumer tech, and utilities and underweight on consumer staples and industrials.

“The medium-term growth story in India does not change, as strong cycles that have begun are likely to support themselves. The extent and duration of the cycle will become clearer once the new government is sworn in as we look at the 100-day agenda,” said Bernstein. “While we see some room for a near-term rebound after today’s sharp correction, the material upside is limited as the fundraising calendar will likely commence after the elections.”

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