New-Age Tech Stocks Continue To Be Under Pressure, Nazara Tech Biggest Loser This Week

The new-age tech stocks saw another subdued week as they were roiled by the overall negative sentiments in the equity market. Besides, sector-related developments also affected some of the listed startups this week.

After being one of the only two stocks to gain last week, Nazara Technologies emerged as the biggest loser among the new-age tech stocks this week and fell about 10.8%. The company’s shares fell for three straight sessions at the start of the week, but recovered slightly to end at INR 653.15 on the BSE on Friday.

The fall in the share price followed the Tamil Nadu government’s approval of an Ordinance banning online gaming in the state.

Meanwhile, at least four stocks, including Paytm and Fino Payments bank, fell between 4%-9% this week.

On the other hand, MapmyIndia, Zomato, and IndiaMart InterMESH were the only gainers this week. 

MapmyIndia was the biggest gainer this week as its shares rose 4.2%, ending Friday’s session at INR 1,397.7 on the BSE. The stock gained significantly after the geotech startup announced a partnership with the Delhi government as part of the latter’s push for setting up EV infrastructure in the state.

The broader market started on a turbulent note, with the benchmark indices NSE Nifty50 and BSE Sensex falling at the start of the week. However, the indices regained some momentum on Friday on the back of positive commentary by the Reserve Bank of India (RBI) Governor Shaktikanta Das on the country’s economy, despite a 50 basis points (bps) hike in repo rate.

Nifty50 and Sensex ended Friday’s session at 17,094.35 and 57,426.92, up 1.64% and 1.8%, respectively, from Thursday’s close. On a weekly basis, Nifty50 and Sensex ended 1.34% and 1.16% lower, respectively.

“Markets reversed this week’s string of huge losses after the RBI Governor Shaktikanta Das underscored the resilience of the Indian economy in his statement even as he delivered a 50 bps repo rate hike, which was on expected lines,” said Prashanth Tapse, research analyst, senior VP (research) at Mehta Equities.

However, the gains of Friday were in sharp contrast to the fall on Wall Street on fears about rising inflation and an impending global recession.

“…global macro factors will continue to dictate the domestic market sentiment going ahead as any fresh spell of negative news could once again trigger the downward spiral,” said Amol Athawale, deputy vice president of technical research at Kotak Securities.

Now, let’s take a look at the weekly performance of some of the listed new-age tech stocks from the Indian startup ecosystem.

The 11 new-age tech stocks ended the week with a combined market cap of around $31.84 Bn versus $32.25 Bn last week.

Paytm Closes At Over A Four-Month Low

Shares of One 97 Communications, the parent entity of Paytm, remained under pressure for almost a third week in a row. Regulatory uncertainties and the end of the lock-in period for pre-IPO investors on November 18 kept investors cautious. 

Paytm shares fell almost 8% this week, closing Friday’s session at INR 637.80 – their lowest level since June 17.

However, brokerages are bullish on the stock. After Goldman Sachs’ positive commentary on the stock last week, brokerage JP Morgan expressed its confidence about Paytm shares this week.

Paytm’s contribution margin is expected to enjoy incremental tailwinds due to incentive income from below-normal loss rates in syndicated loans, scale-up of co-brand credit card issuances, and potential UPI P2M (person to merchant) subsidy, said JP Morgan.

The brokerage maintained an “overweight” rating on the stock with a target price (TP) of INR 1,000, which signifies almost a 57% upside from its last close.

JP Morgan also expects the ongoing funding winter to reduce the competition for Paytm. “In our view, this could benefit Paytm as it is well funded to drive expansion,” it said.

Paytm shares saw a big correction after its listing last year. However, the stock has remained range-bound for the past few months. At the current level, Paytm shares are trading over 67% below their debut price.

In a short-term timeframe, the stock has been moving in a downtrend with lower-high lower-low formations, according to Kunal Shah, senior technical analyst at LKP Securities. 

“For the stock to break on the upper end, it has to take out the level of INR 695… if that is taken out, we can see some further formation once the stock moves towards the level of INR 780-INR 790,” Shah said.

“The current view still remains bearish,” he said, adding that the support on the lower end is INR 580.

Zomato Among The Few Gainers This Week

After remaining range-bound for the past few weeks, Zomato shares regained momentum this week, ending Friday’s session over 2% higher at INR 62.35 on the BSE. 

Before delving deeper into the stock’s movement, let’s take a look at the important company developments this week. 

In The News For:

• Within a month of introducing Intercity Legends on a pilot basis, Zomato is looking at expanding the inter-city food delivery services to the top Indian cities in the next three months.
• Zomato is now testing lower charges for food delivery in lieu of a slightly delayed delivery in order to address the complaints around the platform charging high delivery fees.
• Brokerage Emkay Research initiated coverage on Zomato this week with a ‘buy’ rating TP of INR 90, signifying a 45% upside to the stock’s last close. The brokerage said that Zomato has a strong competitive advantage and its Hyperpure and Blinkit businesses are strategic fits for the core food delivery business.

Shares of Zomato are currently trading almost 45% lower from their debut price on the stock exchanges in July last year.

“For the October series, the charts are looking good for Zomato. The stock has been respecting its 50-day moving average (DMA) and has been seeing some buying actions from the lower levels,” observed Shah.

The 50-DMA is placed around the level of INR 57, so it is a strong support for the stock on the downside. On the upside, there could be a breakout above INR 65, once that is crossed, it is supposed to reach its 200-DMA, which is at INR 79, said Shah.

“So, the overall structure looks quite bullish from the current level. We could see a breakout in the coming week,” he added.

Delhivery Stock Continues To Remain Range-Bound 

After being on an upward trend for a few months post its public markets debut this year, shares of Delhivery have been seeing sideways movements over the last one month or so.

Last week, BofA Securities reiterated its bullish stance on the stock, saying that the festive season would help the logistics startup in near-term volumes. However, it failed to bring any significant movement in the share price. 

Delhivery witnessed a sharp fall at the start of the week, but saw a V-shaped recovery and recouped most of the losses. The stock ended the week 0.7% lower at INR 582.45.

“For Delhivery, we have seen multiple resistance around INR 600. It has been unable to surpass this level and has attended this level two times in recent times,” said LKP Securities’ Shah.

Fresh buying can only be expected after the stock crosses the INR 600 level. On the lower end, the support is at INR 560 zone, he added.

Shah also noted that the stock has not seen significant volumes either on the buy or sell side over the last month, and is stuck between INR 560-INR 600 levels.

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