New-Age Tech Stocks See Another Mixed Week As Market Volatility Persists; EaseMyTrip Slumps 12%

Indian new-age tech stocks witnessed a mixed performance this week as volatility continued to plague the overall market.

Of the 14 listed new-age tech startups under Inc42’s coverage, shares of six gained this week. DroneAcharya emerged the biggest winner, gaining 7.3% on the BSE this week, followed by shares of Paytm, which rallied 7%.

Meanwhile, traveltech major EaseMyTrip, which completed two years of its market listing this week, was the biggest loser as its shares plunged over 12%.

CarTrade Technologies, Zomato, RateGain, Nykaa, Tracxn, MapmyIndia, and PB Fintech were among the other listed tech startups which ended in the red this week.

On Friday, a report emerged of a mass exodus of senior executives at Nykaa. Reuters reported that Nykaa’s chief commercial operations officer Manoj Gandhi, chief business officer of fashion vertical Gopal Asthana, and CEO of wholesale business Vikas Gupta left the beauty ecommerce major. Besides, vice-presidents – Shuchi Pandya of Nykaa’s Owned Brands vertical and Lalit Pruthi of finance – have also tendered their resignation. 

Overall, the broader equity market showed signs of recovery in the first half of the week but slumped again in the second half amid macroeconomic uncertainties. While Sensex fell 0.8% to 57,527.10 this week, Nifty50 declined 0.9% to 16,945.05. 

On Friday, Sensex and Nifty50 fell about 0.7% and 0.8%, respectively, compared to Thursday’s close. Siddhartha Khemka, head of retail research at Motilal Oswal said that the domestic equities came under pressure following the passage of the Finance Bill, 2023 in Lok Sabha yesterday. The Bill has increased the securities transaction tax on futures and options.

It must be noted that the US Fed rate hike of 25 basis points (bps) also came this week.

“Next week will see further increase in volatility due to monthly F&O (futures and options) expiry amidst the highest short positions by FIIs (foreign institutional investors),” said Khemka.

Now, let’s dig deeper and analyse the performance of some of the new-age tech stocks this week.

The 14 new-age tech stocks under our coverage ended the week with a total market capitalisation of $25.01 Bn as against $26.43 Bn last week.

Paytm Shares Take A Big Leap

After falling in the first trading session of the week, shares of Paytm jumped over 11% in two consecutive sessions mid-week. Though the stock shed some of the gains in the last two trading sessions, Paytm emerged as the biggest gainer, with its shares ending 7% higher at INR 619.3 on the BSE this week.

In The News For:

• Paytm launched its new and upgraded payments platform, which is built on an indigenously developed tech stack. It is expected to handle up to 10X the current scale and enhance the digital payments experience.
• Last week, Paytm reported an increase of 86% and 254% year-on-year (YoY) in the number of loans disbursed in February and the value of those loans, respectively. The fintech major disbursed 40 Lakh loans worth INR 4,158 Cr last month.

Shares of Paytm have formed a long bullish candle, so it is looking bullish for the short-term, said Amol Athawale, deputy vice president, technical analyst at Kotak Securities.

“The immediate support for the stock is around INR 580 or the 50-day simple moving average (SMA). Above it, the momentum is likely to continue till INR 660-INR 670, which would be the immediate resistance area for Paytm,” he said.

After falling over 60% last year, Paytm shares are trading almost 17% higher year to date.

Nazara’s Acquisition Spree Continues

Gaming and esports major Nazara Technologies announced this week that its subsidiary and sports news platform Sportskeeda will acquire a 73.27% stake in the US-based Pro Football Network LLC for $1.82 Mn in an all-cash deal.

Nazara was the second-biggest gainer this week among the new-age tech stocks, rising 3.7% on the BSE. Its shares ended Friday’s trading session at INR 510.8.

It must be noted that Nazara jumped over 4% during Tuesday’s session after ICICI Securities initiated coverage on the gaming startup with a ‘buy’ rating and an extremely bullish outlook.

The brokerage set a price target of INR 700 on the stock, which implies an upside of 37% to its last close. It sees the EBITDA margin for Nazara’s overall esports business improving by about 200 bps YoY in FY24.

There are also signs of stabilisation in the key performance indicators of Nazara’s gamified early learning segment from Q3 FY23, ICICI Securities added.

The research also noted that Nazara has taken limited action in the real money gaming (RMG) space so far due to regulatory uncertainties. Continued delay in this space affects the growth opportunities that the company is well positioned to capture, it said.

Admitting that Nazara has been conservative when it comes to the RMG space, the company’s CEO and joint MD Nitish Mittersain said at Inc42’s The Maker Summit 2023 on Saturday, “I think, if I were to do things differently going back, let’s say a decade, I would definitely double down a lot more on the RMG space than what we have done till now.”

Kotak Securities’ Athawale said that shares of Nazara are trading near the 20-day SMA after a long time, but the texture is still weak and there is a lower-top formation. The stock can rise up to INR 540-550 if it succeeds in trading above INR 520, he added.

EaseMyTrip The Biggest Loser

Shares of EaseMyTrip fell in all five trading sessions, making it the biggest loser among the new-age tech stocks. The stock fell 12.5% this week. On Friday, shares plunged 4.5% to close at INR 40.51 on the BSE. 

EaseMyTrip completed two years of its listing on the Indian stock exchanges on March 19. It is among the few profitable new-age tech startups and its shares saw a lower decline last year amid the macroeconomic volatility compared to the rout seen in share prices of its peers.

This week, travel fintech startup SanKash also announced a partnership with EaseMyTrip to offer travel insurance and Travel Now Pay Later (TNPL) services. With this partnership, EaseMyTrip customers will now be able to purchase travel insurance that covers medical expenses, trip cancellations, lost baggage, and other travel-related risks.

Kotak Securities’ Athawale said that shares of EaseMyTrip are consistently facing selling pressure at higher levels and the short- and medium-term trend looks weak. “There is no promising sign of a reversal in the stock immediately. A pullback rally is possible but it’s minor,” said Athawale. 

The short-term resistance for the stock is at around INR 44-INR 45. Below it, correction is likely to continue and the stock may also touch INR 37-INR 38 level, he added.