New-Age Tech Stocks Slump Further This Week Amid US Banking Sector Crisis; Zomato, PB Fintech Gain

Indian new-age tech stocks remained under pressure this week as well, as the global stock markets wilted on fears of a global economic crisis after the collapse of Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank in the US.

Though the broader Indian stock market stabilised a bit on Friday, shares of a majority of the new-age startups closed 0.1% to 17% lower this week.

Eleven out of the 14 new-age tech stocks under Inc42’s coverage fell this week, with DroneAcharya emerging as the biggest loser (down 16.8%). It was followed by CarTrade Technologies (down 10.5%) and MapmyIndia (down 10.3%). 

Despite Paytm reporting an increase in its loan disbursal amount and value on a year-on-year (YoY) as well as sequential basis in February, the fintech major’s shares fell about 2.5% this week.

PB Fintech, IndiaMart InterMESH, and Zomato ended in the green despite the pressure in the broader market. Their shares rose 1.9%, 2.9% and 2% this week, respectively.

Benchmark indices Sensex and Nifty50 slipped 1.9% and 1.8% this week, respectively.

However, Sensex and Nifty50 ended higher on Friday compared to Thursday’s close. While Sensex gained 0.6% to end at 57,989.9, Nifty50 rose 0.7% to 17,100.05.

Speaking about the revival by the end of the week, Amol Athawale, technical analyst (DVP) at  Kotak Securities said, “What we are seeing is a relief rally backed by strong positive global cues as there are expectations that the US Fed may not take aggressive rate hike steps to tame inflation. Some of the concerns over the falling financial health of the US banking industry have also subsided, which further boosted the market sentiment.” 

“Falling crude oil prices and recovery in the metal space on hopes of revival in the Chinese economy is also providing some support to the struggling markets,” he added.

Now, let’s take a deeper look at the performance of new-age tech stocks this week.

The 14 new-age tech stocks under our coverage ended the week with a total market capitalisation of $26.43 Bn as against $26.49 Bn last week and $27.41 Bn at the end of the week before that.

Nazara’s Subsidies Get Back SVB Money

The collapse of SVB, which is the biggest bank failure after 2008 in the US, spread panic in the global startup ecosystem as the bank primarily worked with VC-backed tech companies. As per the Centre, Indian startups had deposits worth about $1 Bn in SVB.

Amid this, gaming startup Nazara Technologies, in an exchange filing this week, said that its step-down subsidiaries Kiddopia and Mediawrkz, which had a cumulative cash balance of $7.75 Mn (about INR 64 Cr) in SVB, received unrestricted access to the entire amount.

Following the announcement, Nazara shares gained mid-week. However, the shares slipped once again in two straight sessions later in the week, closing at INR 492.45 on the BSE on Friday, down 1.3% compared to Thursday’s close.

Overall, shares of Nazara ended the week 4.9% lower. 

Commenting on the stock, Jay Thakkar, head of alternate research at Sharekhan, said that INR 515 is the resistance level for Nazara right now and the stock can see a reversal rally only above it. 

Zomato Shares Manage To Gain Amid Pressure

Foodtech major Zomato was among the three new-age tech stocks that gained this week. It was the second biggest gainer as its shares rose a little over 2%. On Friday, shares of Zomato ended 3.5% higher from Thursday’s close at INR 54.94 on the BSE.

In The News For:

• At a time when the listed startup is doubling down on its profitability goals, it announced closing its Jordan-based step-down subsidiary Zomato Ireland Limited. It would not have an effect on Zomato’s turnover/revenue, the company said.  
• Zomato’s quick-commerce platform Blinkit is engaged in a bitter legal battle with Bengaluru-based startup Blinkhit over use of the name ‘Blinkit’.

Competition Watch:

• Swiggy, Zomato’s biggest competitor in the food delivery space, has announced a new initiative, Swiggy Launchpad, under which newly onboarded eateries would not have to pay any commission for the first month.

After a drastic downfall in 2022, shares of Zomato have stabilised a bit in 2023. However, the shares have fallen 7% year to date.

Zomato’s technicals look good in the short term and the stock seems to be reversing from the oversold range, said Sharekhan’s Thakkar. “Zomato has formed a range of INR 58-INR 48, which is approximately a 20% range. So, above INR 58, it can gain another 20% and the shares can go to INR 68,” he added.

Paytm Slips Despite Increase In Loan Disbursals

Paytm disbursed 40 Lakh loans worth INR 4,158 Cr in February this year, which was a rise of 86% and 254% YoY, respectively.

Despite the continuous strong growth in its lending business, Paytm shares fell about 2.5% this week, ending Friday’s session at INR 578.5 on the BSE. The shares fell sharply in four straight trading sessions but closed 1.2% higher on Friday compared to Thursday’s close.

In a research note published earlier this week, Citigroup reiterated its ‘buy’ rating on Paytm. The brokerage said that Paytm has several existing and emerging levers to drive long-term platform stickiness and can improve overall profitability in the business.

Citigroup has a target price of INR 1,061 on the stock, which implies an upside of 83.4% to its last close.