Dalal Street: Dalal Street's new entrants struggle against the current -GROWMUDRA

Dalal Street's new entrants struggle against the current

25 Jan , 2022 By : monika singh

Mumbai: Zomato NSE 7.61 %, Nykaa NSE -4.61 % parent FSN E-Commerce Ventures and PB Fintech (PolicyBazaar) were among key casualties in Monday's market crash that dragged down newly listed companies, with shares of new-age technology companies facing the brunt of selling pressure. Out of 63 initial public offerings (IPOs) in 2021, stocks of 33 have dropped below the listing price while 20 are lower than the offer price.

Zomato, one of the IPO market's biggest stars in 2021, plunged 20% to ?91.35 on Monday, extending its recent slide. Shares of the food delivery platform are trading below the listing price of ?115 but above the offer price of ?76 per share. The stock has declined 32% in the last five sessions. Nykaa's owner FSN E-Commerce Ventures, which also had a stellar debut, dropped 12.6% on Monday to ?1,736. Shares of Paytm parent One97 Communications declined 4.4% on Monday to ?917, having dropped 17% over the previous week.

US Fed's Sudden Shift
PolicyBazaar parent PB Fintech fell 10% to Rs 777.

According to analysts, the US Federal Reserve's sudden shift toward fighting inflation by pulling back liquidity and indicating multiple interest rate hikes this year and the next has weakened the case for investment in richly priced technology stocks.
"Startup valuations have been overheated throughout last year as seen in the record number of unicorns in 2021," said Aniket Pandey, research analyst, Prabhudas Lilladher. "We believe an upward revision in rate hike used to discount future growth can have a catastrophic effect on the present values of future earnings of companies and fall may continue in new-age companies for some more time."
Paytm shares are currently trading 57?low the offer price, while CarTrade Tech and Suryoday Small Finance Bank have dropped over 53% from the IPO price. Among the other IPOs, Windlas Biotech, Fino Payments Bank, Krsnaa Diagnostics, SJS Enterprises, Aditya Birla Sunlife AMC, and Kalyan Jewellers India have declined more than 25% from the issue price.

Indian stock markets have been under pressure since the beginning of 2022 as central banks such as the US Federal Reserve are expected to raise interest rates to contain inflationary pressures. The decline is expected to affect liquidity, and already there has been a trend of profit-booking or sell-offs in the tech sector.
Investors seem to be taking their money off new-age startups in panic due to profit booking encountered across various counters," said Rahul Sharma, co-owner, Equity 99. "Recently listed new-age startup companies have been consistently reporting losses and the crash in the Nasdaq along with an increase in interest rates has increased the misery."