New-Age Tech Stocks Rally Post Election Results As Broader Market Gains Strength

After the rout on Tuesday (June 4), new-age tech stocks rallied on Wednesday in line with the rise in the broader equity market as it became clear that the National Democratic Alliance (NDA) will form the next government under the leadership of Prime Minister Narendra Modi. 

Twenty out of the 23 listed new-age tech startups under Inc42’s coverage gained during today’s trading. Mamaearth rallied a massive 10.5%, reversing its over 9% fall on Tuesday.

Meanwhile, yesterday’s biggest loser Nazara Technologies closed almost 3% higher today at INR 697 on the BSE. Zomato gained 6.8% to end the session at INR 183.75, Delhivery jumped almost 5% at INR 378.55, and Nykaa ended today’s trading 3.7% higher at INR 162.55.

However, Paytm continued to remain under pressure. The stock shares declined 4.9% to INR 339.85 on the BSE today. 

NSE SME-listed Yudiz was the other loser, falling 3.8%. Meanwhile, shares of Yatra ended flat on the BSE.

Overall, the 23 new-age tech stocks ended today’s trading session at a total market cap of around $52.5 Bn as against $50.23 Bn yesterday.

It is pertinent to note that the Indian equity market crashed yesterday as the ruling Bharatiya Janata Party (BJP) fell short of the majority mark in the Lok Sabha and its tally of 240 seats was far below what the exit polls projected.

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

However, as it became clear that PM Modi is set for the third term, the Sensex rallied 3.2% today to 74,382.24 and Nifty50 jumped 3.4% to 22,620.35.

Later in the evening today, the leaders of NDA unanimously elected PM Modi as the leader of the alliance.

Speaking on Wednesday’s market revival, Siddhartha Khemka, head of retail research at Motilal Oswal, said that besides the political reason boosting the market again, expectation of a healthy monsoon is also driving buying interest in FMCG and auto stocks. 

“Going ahead, the narrative around government formation and the RBI monetary policy would take centre stage in the near term. Despite the reduced seats, we expect the government focus to continue on investment-led growth, capex, infrastructure creation, manufacturing, etc, in the long term,” said Khemka.

“In the very near term, we expect the market to remain obsessed with the government formation exercise, with a keen eye on key cabinet portfolios such as finance, defence, roads, energy, commerce, and railways. With the election overhang done, we expect the focus to revert to fundamentals,” he added.

It is pertinent to note that the central bank will announce the decision of its monetary policy committee (MPC) on Friday (June 7).