Bull Run In New-Age Tech Stocks Continues; Nazara Biggest Gainer This Week

The uptrend in new-age tech stocks continued for yet another week on positive business-specific updates and a bull run in the domestic equity market.

Nine out of 16 stocks under Inc42’s coverage, including Nykaa, Nazara Technologies, Paytm, PB Fintech, and Zomato, rose in a range of 1%-16% this week.

Nazara emerged as the biggest gainer of the week, with its shares surging 15.5% on the BSE on the back of fresh investments in the company.

However, Delhivery, Fino Payments Bank, Yudiz, DroneAcharya, RateGain, and EasyMyTrip witnessed a decline, falling in a range of 0.09% to over 5%. Traveltech major EasyMyTrip, which was the biggest gainer two weeks ago, was the biggest loser among the new-age tech startups. 

In the broader market, benchmark indices Sensex and Nifty 50 rallied in all five sessions this week. Sensex ended the week 1.85% higher at 66,598.91, while Nifty 50 closed at 19,819.95, up 1.98%. 

“Nifty has been gaining strength and is inching closer towards its life high of 19,992. With monsoon gradually improving and India set to host the G20 summit over the weekend, sentiments are buoyant and may lift the market towards its life high and 20K mark over the next few days,” said Siddhartha Khemka, head of retail research at Motilal Oswal.

He also noted that banking stocks saw renewed interest this week after the Reserve Bank of India (RBI) said it would phase out incremental cash reserve ratio (ICRR) requirements by October 7.

While the market is expecting Nifty to cross the 20K mark next week, Shrikant Chouhan, head of equity research (retail) at Kotak Securities, pointed out that the dark shadows of slowdown in global growth, high interest rates and valuation, and high inflation (particularly food inflation) globally as well as domestically continue to weigh on the market.

However, the overall situation has improved significantly for the new-age tech stocks from the bearish sentiment last year. 

Now, let’s take a look at the performance of some of the new-age tech stocks this week.

The 16 new-age tech stocks under Inc42’s coverage ended the week with a total market capitalisation of $37.21 Bn, slightly lower from $37.24 Bn last week.

Nazara Emerges As The Biggest Gainer

Shares of Nazara jumped 15.5% this week, ending Friday’s session at INR 876.8 on the BSE. Last week, Nazara said that it was looking to raise fresh capital via issuance of equity shares. This week the company was in the news for the investment updates.

In The News For:

• Nazara confirmed this week that Zerodha founders Nithin Kamath and Nikhil Kamath are investing INR 100 Cr in the gaming and sports media platform. 
• SBI Mutual Fund is also set to invest INR 410 Cr in the company. 

It must be noted that while announcing its financial results for Q1 FY24, Nazara hinted at more acquisitions going forward.

Shares of Nazara are up over 51% year to date (YTD).

Commenting on the stock, Jay Thakkar, head of alternate research at Sharekhan, said that it has a good support at INR 790 and the shares can rally up to INR 1,020 in the near future. 

Paytm Launches Multiple New Products 

Fintech major Paytm continues to aggressively grow its payments portfolio while eyeing profitability. This week was a testament to the same.

In The News For:

• Paytm announced partnership with the National Payments Corporation of India (NPCI) to launch multiple new UPI features. In a statement, a Paytm spokesperson said, “… we are proud to partner with NPCI to enable the launch of innovative new features like Credit Line on UPI, Billpay Connect and UPI Tap & Pay. Bringing these offerings first to our users, we will take Paytm UPI to the next level, driving further adoption.” 
• Paytm also launched a new device called Card Soundbox this week to enable merchants to accept card payments from Visa, Mastercard, American Express, and RuPay networks. As per Paytm, 87 Lakh merchants used its payment devices as of August 2023.
• Paytm founder and CEO Vijay Shekhar Sharma is looking to raise his stake further in the company.

Shares of Paytm rose 5.5% this week, ending Friday’s session at INR 904.25 on the BSE.

Sharekhan’s Thakkar said shares of Paytm are likely to continue their rally in the near term. The stock has a potential upside target of INR 1,050, while INR 830 is the support level, he added.

Nykaa Witnesses Sharp Rally

Muted business growth and increase in competition has resulted in shares of Nykaa giving lesser returns this year compared to its peers Zomato and Paytm. However, the stock rallied 8% this week, emerging as the second biggest gainer after Nazara among the new-age tech companies. Shares of Nykaa ended the week at INR 146.1 on the BSE.

While there was no clear reason for the jump in share price, it could have been driven by improved sentiments as this week Jefferies conducted its 4th Annual Asia Forum this week which was expected to be attended by Nykaa.

Meanwhile, in a consumer survey report on the beauty and personal care (BPC) segment, JM Financial said Nykaa remains a strong play on India’s secular BPC growth.

“We understood from our conversation with participants that Nykaa has been successful in building its image as a company that provides ‘authentic’ products, which has led people to shift to the online platform for BPC products and the company being primarily responsible for this habit formation,” the brokerage stated.

As per the report, Nykaa remains highly popular among the country’s females, with 80% penetration. However, only 25% of males shop on Nykaa’s platform. 

JM Financial’s survey saw participation of over 200 individuals from more than 35 cities.

“The short term trend for Nykaa is positive,” said Sharekhan’s Thakkar. He sees INR 130 as crucial support for the stock and believes that Nykaa can rise up to INR 165.