SUMMARY
Delhivery and Nazara were the only gainers among new-age tech stocks, ending marginally higher this week at INR 586.40 and INR 732, respectively, on the BSE
EaseMyTrip was the biggest loser, falling over 7% this week; Nykaa closed at a four-month low level
NSE Nifty50 and BSE Sensex fell 1.16% to 17,327.35 and 1.26% to 58,098.92, respectively, amid turmoil in the global market
Indian new-age tech stocks witnessed a sharp fall this week, largely hurt by the overall downtrend in the Indian and global stock markets following the expected US Fed rate hike and escalation of the Russia-Ukraine war.
Reversing last week’s gains, EaseMyTrip shares slipped over 7% this week to emerge as the biggest loser among the new-age tech stocks. Similarly, after last week’s rally, CarTrade Technology ended over 7% lower this week, becoming the second-biggest loser.
Delhivery and Nazara Technology were the only exceptions this week, as seven other new-age tech stocks fell 0.2% to 6%. Shares of Delhivery and Nazara also rose only marginally this week, ending Friday’s session at INR 586.40 and INR 732, respectively, on the BSE.
Earlier this week, global brokerage Jefferies reiterated its bullish stance on Nazara and increased the target price (TP) to INR 860 from INR 780 earlier. However, Indian brokerage JM Financial’s analysis of the stock was in a sharp contrast to Jefferies as it downgraded Nazara to ‘sell’ from an earlier ‘hold’ rating. JM Financial has a TP of INR 650 for Nazara due to its unclear long-term compounding growth narrative.
On the other hand, BofA Securities reiterated its bullish stance on Delhivery this week, saying that the festive season would help the logistics startup in its near-term volumes.
Overall, it was a turbulent week for the Indian stock markets, with the benchmark indices NSE Nifty50 and BSE Sensex falling 1.16% to 17,327.35 and 1.26% to 58,098.92, respectively. On Friday alone, Nifty50 and Sensex declined 1.72% and 1.73%, respectively, compared to Thursday’s close.
“With the latest round of interest rate tinkering by the US central bank, investors have turned risk averse and are dumping shares at will,” said Amol Athawale, deputy vice president of technical research at Kotak Securities.
“Traders are also worried about the escalation in Russia-Ukraine conflict, which is prompting them to exit equities and park funds in safe haven dollar assets,” he added.
Now, let’s dig a little deeper into 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 $32.25 Bn as against $33.91 Bn last week.
EaseMyTrip Shares The Biggest Loser
Last week, it looked like travel tech startup EaseMyTrip was regaining its momentum. However, its shares plunged as much as 7.6% this week on the BSE. On Friday alone, the stock fell 5.6%, ending at INR 383.8 on the BSE.
In an investor presentation this week, EaseMyTrip said that it is looking to acquire controlling stakes in more companies in India and abroad. Besides, the startup reiterated its plan to launch a currency exchange service for travellers.
While the stock seems to be under near-term pressure majorly due to global trends, analysts continue to be bullish on the stock in the long-term. EaseMyTrip is one of the three new new-age tech stocks among the 11 stocks we cover that is currently trading higher than their debut prices.
At the current level, EaseMyTrip shares are trading over 86% above their debut price on the BSE.
“Currently, EaseMyTrip has turned slightly bearish, but on the downside, it has a support of INR 365. So, not much downside left after Friday’s trading session,” Mehul Kothari, AVP of technical research at Anand Rathi, said, adding that it could trade at the support level of INR 365 next week.
After that, the stock is expected to resume its upside rally towards INR 400, and post that, INR 420, Kothari added.
Competition Watch
- Flipkart forays into online hotel bookings segment with Flipkart Hotels, backed by Cleartrip’s API
- Goibibo recently said that it has seen a 65% rise in its transacting users since January 2022
Paytm’s Fall Continues
The shares of One 97 Communications, the parent entity of Paytm, continued their fall this week. After declining over 1% last week, shares of Paytm fell over 3% this week.
Paytm shares slumped in three straight sessions starting Monday. However, the shares recovered a little by the end of the week, ending Friday’s session at INR 692.45 on the BSE, up 1% compared to Thursday’s close.
The slight recovery on Friday followed the release of Goldman Sachs’ note on the fintech major in which the former said it has added Paytm to its ‘conviction list’. Besides reiterating its ‘buy’ rating on the stock, the brokerage said that Paytm is set to deliver about 50% revenue growth for the next few quarters.
Goldman Sachs also has a TP of INR 1,100 on Paytm stock, which signifies an upside of about 60% to the last close of the shares.
Paytm is near to its very strong support, which is INR 670. Every time the stock has reached this level, there has been some kind of demand at the counter, said Kothari.
“So, INR 670 will be a very crucial level for Paytm in the coming week,” he said. “If it doesn’t break 670 then it will be safe, but we are not expecting any kind of firework from the stock unless it crosses the INR 750 mark.”
After a lacklustre listing on the NSE and the BSE in November last year, Paytm shares have gone through several ups and downs. Currently, the stock is trading over 64% lower from its debut price.
Nykaa Stocks Close At Four-Month Low Level
After being range bound for some time, shares of Nykaa parent FSN E-Commerce Ventures fell sharply in three straight sessions this week. Though the shares recovered a little on Thursday, they fell again by about 1.3% on Friday to end the week at INR 1307.10.
On a weekly basis, the shares fell close to 4%. Nykaa shares are currently trading at a level last seen on May 13.
Before we delve deeper into the stock performance, let’s take a look at a few fundamental changes taking place in the overall beauty and personal care retail market.
Competition Watch:
- Tata Group’s lifestyle ecommerce platform Tata Cliq is reportedly mulling opening physical stores, which could throw a major challenge to Nykaa
- Reliance Retail is in talks to acquire the rights for beauty retailer Sephora in India, which might again escalate the growing competition in this segment
While the update from Reliance Retail might have played a role in affecting Nykaa’s stock price this week, it could largely be a valuation factor that led to the dip, an analyst said.
Besides, Nykaa has been in the news recently for some other reasons.
In The News For:
- Nykaa’s founder Falguni Nayar topped the list of India’s richest self-made women, as per the IIFL Wealth Hurun India Rich List 2022, overtaking Biocon’s Kiran Mazumdar-Shaw
- Nykaa recently completed the acquisition of the parent company of digital content platform Little Black Book (LBB), Iluminar Media
Speaking on the stock’s performance, Kothari said that after being bound in the INR 1,400-INR 1,500 range for some time, Nykaa has moved to the INR 1,300-INR 1,400 range. The stock’s upside resistance is at INR 1,400.
“Right now it is near the support of INR 1,300, which is a major support for the stock. The problem is there is no direction to move in this downturn, but once it breaks INR 1,300, the stock might reach its 1,200 level also,” he added.
