Shares Of Tech Startups Slump Along With Broader Market On Covid Fears

Shares of Indian new-age tech startups, which have been under pressure for the last few months, plunged on Thursday (December 22) in line with the overall Indian stock market as fears about rise in Covid-19 cases in the country made investors cautious. 

Shares of beauty ecommerce startup Nykaa touched a new record low at INR 147.65, falling as much as 3.2% during the intraday trading on the BSE. 

Nykaa’s shares have been falling steeply since last week after its pre-IPO investor Kravis Investment Partners sold shares worth INR 629 Cr via multiple block deals. The shares touched new record lows in all four sessions of the week so far.

Shares of Nykaa fell 7.2% in the last four days, including Thursday. The stock closed today’s session at INR 151.55, down 0.7% compared to the previous close.

Meanwhile, foodtech giant Zomato fell almost 4% to INR 58.95 today on the BSE, while Paytm declined 2% to INR 506.50.

Shares of traveltech startup EaseMyTrip, which have largely remained resilient in the face of all the challenges its tech peers are facing, were also hit in the last two sessions. Shares of EaseMyTrip ended today’s session at INR 51.2, down 3.6% from Wednesday’s close.

It must be noted that the Indian government has sounded alert after four new Covid cases of Omicron subvariant BF.7 were reported in the country. The BF.7 variant is the one responsible for rising Covid cases in China in recent months.

Ahead of the markets opening today, Prashanth Tapse, research analyst and senior VP (Research) at Mehta Equities, said, “…investors need to be careful of the sharp intraday volatility seen in the last few sessions due to growing uncertainty over rising Covid cases in China and recessionary fears in key economies with more interest rate hikes going ahead further adding to the concerns.” 

Tapse also said that other factors like rising oil prices and the dollar gaining strength could dampen market sentiment.

Much in line with the fears, both the benchmark indices Nifty50 and Sensex ended today’s session in the red zone as all the sectors came under pressure, with major selling witnessed in the auto, metals, and realty sectors.

Both Nifty50 and Sensex fell about 0.4% to 18,127.35 and 60,826.22, respectively, on Thursday.

“Market is likely to remain volatile given the uncertain environment and rising Covid cases globally. Even on the domestic front, the government has started taking precautionary measures to control the pandemic at the initial stage. This has led to cautiousness among investors,” said Siddhartha Khemka, head of retail research at Motilal Oswal.

“We advise traders to keep positions light in view of increasing volatility and trade with strict stop loss,” Khemka added.