New Age Tech Stocks Recover $6 Bn+ In M-Cap As FIIs Turn Bullish

Buoyed by the waning selling spree of foreign institutional investors (FIIs) and a strengthening Indian currency against the dollar, new-age tech stocks added $6.4 Bn to their cumulative market capitalisation this week.

In the third week of March (between March 17 and March 21), as many as 27 of the 32 new-age tech companies under Inc42’s purview gained in a range of 0.98% to just under 21%. 

The week’s top gainer PB Fintech, which had shed over 30% since the start of the year, rose 20.65% to close the week at INR 1,602 on Friday. 

The bull run for the fintech company came at the behest of a positive brokerage report from Kotak Institutional Equities on March 18. The brokerage has upgraded PB Fintech to ‘Add’ from the erstwhile ‘Reduce’ rating. It has a price target of INR 1,525 on the stock. The PB Fintech stock seems to have breached Kotak’s anticipation for now.  

“We believe that PB has multiple growth segments to toggle, the acumen to identify demand gaps, and the ability to capitalise on the same to sustain 1.8-2.0X industry growth,” a Business Standard report quoted the brokerage as saying.

MobiKwik, which ended the week at INR 321.30, up 18.78%, was the second-largest gainer during the week. After touching an all-time low of INR 231.05 on Monday, the fintech’s shares hit their upper circuit the next day. 

The company’s shares had tanked to a record low on the first day of the week after its three-month anchor lock-in period came to an end. The lock-in expiry unlocked 5 Mn shares, equivalent to 6% of the outstanding equity of the company. 

Meanwhile, Paytm also saw an uptick in investor interest this week. Its shares zoomed 10.01% to finally conclude the week at INR 751.20. 

Moving on, foodtech major Zomato gained 12.98% to end the week at INR 227.55. With this, the company added a market cap of over $3 Bn to $25.53 Bn. Meanwhile, Zomato has officially rechristened itself to Eternal as the company received the Ministry of Corporate Affairs (MCA) nod for the name change on March 20. 

However, the market bull run during the week brought little respite for Zomato’s arch-rival Swiggy, which shed at least 0.79% to end the week at INR 350.50. 

Besides Swiggy, the other losers during the week were TBO Tek (down 0.14%), Menhood (down 0.79%), FirstCry (down 3.39% ) and Yudiz (down 15.38%). 

Yudiz touched an all-time low of INR 32.35 on Friday before paring some of its losses to finally conclude the week at INR 33. Notably, the NSE SME-listed IT development company’s share prices have been on a downward trend for quite some time now. Last week, too, the stock shed 15.38% to close at INR 33. 

Overall, the total market cap of the 32 new-age tech stocks stood at $76.65 Bn at the end of the week versus $70.25 Bn in the preceding week.

Why The Bull Run? 

The Indian equities markets witnessed a significant uptick this week. While Sensex ended the week up 4.17% at 76,905.51, Nifty gained 4.26% to close at 23,350.40. 

“Following a remarkable recovery, Nifty has now approached its critical resistance around the moving averages ribbon at 23,400. A decisive breakout above this level could further fuel momentum, potentially driving the index towards the 23,800-24,100 range. On the downside, the 22,750-23,000 zone is expected to serve as crucial support,” Ajit Mishra, senior vice-president of research at Religare Broking, said.  

Meanwhile, the increased influx of capital in the equities market has come due to a correction in the dollar index.

“The Fed’s (US Federal Reserve) decision to hold rates steady and its forecast for lower interest rates ahead pulled the dollar down, providing significant support to the rupee,” Vinod Nair, head of research at Geojit Financial Services, added. 

Further, foreign institutional investors (FIIs) finally ended their selling spree, helping the Indian currency to gain some strength. FIIs turned buyers, infusing INR 3,255 Cr in the Indian markets on March 21. 

“The recent reversal in FII selling has turned the market sentiments for the better, facilitating a rally in the market for the week ended March 21. It can be argued that positive domestic fundamentals like pick up in growth and decline in inflation coupled with weakness in the dollar have contributed to the change in FII strategy,” VK Vijayakumar, chief investment strategist at Geojit Investment Services said. 

Ola Electric Zooms Despite Regulatory Tussle

Despite what can be dubbed a tough week for Ola Electric, the company’s shares rallied 10.80% to end the week at INR 56. The rally for Ola Electric came after the company touched an all-time low of INR 46.32 on March 18 when reports of “raids” at its experience centres across the country started surfacing. 

Later, the company informed the bourses that it had received notices from local authorities of four states regarding the lack of trade certifications. Besides, Ola Electric is also being probed by the Ministry of Heavy Industries (MHI) over a mismatch in its reported sales and registration data for February. 

On a positive note, however, Ola Electric, on Saturday, kicked off the deliveries of its S1 Gen 3 portfolio, which includes the flagship S1 Pro+ along with S1 Pro.

Paytm Gets A Shot In The Arm

Amid broader market recovery, fintech major Paytm gained about $560 Mn to end the week at a market capitalisation of $5.57 Bn. The company’s shares surged 10.01% during the week to settle at INR 751.20. 

The revival came on the back of its investment tech arm, Paytm Money, receiving the SEBI approval to operate as a registered research analyst. This will allow Paytm Money to provide SEBI-compliant research services, which include investment insights, research reports and data-driven analysis.

Meanwhile, brokerage firm Motilal Oswal said this opens a new door of opportunity for the company to diversify into the wealth management space. This will also help the company unlock a “new stream of fee-based income”. Moreover, the brokerage firm has given a ‘Neutral’ to Paytm, with a price target of INR 870.