A mixed week for New Age Tech stocks amid a bloodbath in the broader market

ABSTRACT

CarTrade turned out to be the biggest loser on the list of 17 new technology companies that ended the week with losses ranging from 0.88% to over 7%.

Recently publicly traded D2C brand Menhood gained the most this week among 11 other startups, with gains ranging from 0.15% to just under 13%.

The Indian market witnessed a noticeable decline this week, with the Sensex falling 4.5% to close at 81,688.45, while the Nifty50 fell 4.4% to end at 25,014.60.

In a tumultuous week in the broader Indian market, tech stocks saw mixed investor sentiment. Eleven of the 28 stocks covered by Inc42 have gained between 0.15% and just under 13% this week.

Jaipur-based men’s grooming brand Menhood has gained the most this week. Shares of Menhood’s parent company Macobs Technologies ended the week at INR 145, up 12.93% from last week.

Other gainers of the week include Paytm, PB Fintech, Go Digit, RateGain, among others.

Meanwhile, 17 startups ended the week in the red, falling ranging from 0.88% to over 7%. The biggest loser this week was the car market CarTrade, whose shares fell by 7.36% and ended the week at INR 907.75.

Delhivery, EaseMyTrip, Nykaa, Awfis, Ola Electric and Zomato were among the other losers this week.

It is worth noting that the market was closed on October 2 on account of Gandhi Jayanti.

Meanwhile, the broader market’s four-week momentum slowed sharply this week. While the Sensex fell 4.5% to end the week at 81,688.45, the Nifty50 fell 4.4% to 25,014.60.

Escalation of geopolitical tensions in the Middle East caused a decline on global markets this week due to their impact on fuel prices. Moreover, the stimulus measures announced by China have caused global investors to shift their attention from the Indian market to the Chinese market.

Vinod Nair, head of research at Geojit Financial Services, said the decline in the Indian market this week was widespread. He expects the market to remain under pressure for some time.

“A sharp increase in oil prices resulting from growing tensions in the Middle East may increase production cost inflation and thus affect the visibility of profits of domestic companies. There is likely to be a consolidation phase in the market as costly valuations and unfavorable macro conditions may prompt investors to adopt an upward sell-off strategy,” he said.

Meanwhile, Hrishikesh Yedve, Technical Research and Derivatives Specialist at Asit C. Mehta Investment Intermediates, said the indices have broken a key support base and are pointing to fresh weakness that could lead to further downside movement.

Meanwhile, 41 companies filed IPOs in September, the highest figure ever recorded in a single month, amid a rally in broader markets.

In the startup context, coworking space provider DevX is the latest to file a draft Red Herring Prospectus (DRHP). Its a public matter will consist solely of fresh issue of equity shares worth 2.47 Cr.

Apart from DevX, food major Swiggy has filed its updated DRHP with SEBI on September 26I got the nod from shareholders this week increase the size of the fresh releaseew in its IPO to INR 5,000 Cr from INR 3,750 Cr earlier.

Commenting on IPO trends, Pantomath Financial Services Group founder Mahavir Lunawat said, “An increasing number of growth stage companies are taking to the streets. Moreover, we will have a tendency for multinationals to visit the Indian capital market. Apart from this, several other market liquidity parameters, especially monthly mutual fund flow, have doubled since last quarter and we are approaching INR 40,000 Cr every month. This has phenomenally increased the resilience of the capital market.”

With that said, let’s take a closer look at how tech stocks are performing this week.

The total market capitalization of the 28 new-age tech stocks covered by Inc42 fell to $80.85 billion at the end of this week, down from $81.69 billion last week.

Honas’s problems in the United Arab Emirates

Shares of Mamaearth’s parent Honasa Consumers fell 6.27% to end the week at INR 427.95. With this, the company’s market capitalization also dropped to $1.65 billion.

It’s worth noting that the stock has plateaued highest level of all time on September 10 at a price of INR 546.50.

The main reason for the share price decline this week was the Dubai court’s ruling in connection with the company’s dispute with its former distributor in the United Arab Emirates, RSM General Trading.

Honasa said on Friday that a The court in Dubai upheld its decision directing the seizure of his property. However, the court rejected RSM General Trading’s request to revoke the trade license of its subsidiary Honasa Honasa Consumer General Trading LLC.

The company assured that it would appeal against the latest judgment of the court in Dubai. Honasa also said that the order will have no financial impact, adding that it is in the process of initiating contempt proceedings against RSM General Trading in the Delhi HC for failing to comply with the previous court order.

Despite this, Friday’s session on the BSE ended with a decline of over 4%.

On Saturday, the company clarified the situation does not have any assets in the United Arab Emirates and its subsidiary in Dubai was released from the seizure order.

CarTrade continues to decline

For the third straight week of stock losses, CarTrade shares took a big hit this week. The stock fell 7.36% to end the week at INR 907.75. In addition, the market capitalization also decreased to $510 million.

Within a week, Goldman Sachs Asset Management said yes increased its share in the startup to 7.19% from 5.15% at the end of the June quarter. Goldman Sachs and its affiliates acquired an additional 9.78 Lakh shares of CarTrade through an open market transaction, an exchange filing said.

Last week, Warburg Pincus left the startup by divesting its entire 8.64% stake in the automotive market for INR 375.1. Most of the shares were taken up by Mirae Asset Mutual Fund which bought 30.22 Lakh shares at INR 920 per share.

It may be mentioned that CarTrade shares gained 6.02% to hit a 52-week high of INR 1,034.50 on the BSE during intraday trading on September 25. However, since then, the stock has fallen about 12%.

TAC Infosec benefits from international expansion

Shares of NSE Emerge-listed TAC Infosec ended the week at INR 723, up 10.40% from last week. The company’s market capitalization also increased to $90.16 million.

Startup completed numerous takeover announcements this week. In a stock exchange filing on September 30, the cybersecurity startup said it had acquired US company CyberSandia to strengthen its regional presence and expand its global operations. CyberSandia holds an exclusive government contract to provide IT services in New Mexico.

Last month, the startup said it would acquire CyberSandia for $25,000.

TAC Infosec also announced the acquisition of WOS, a wholly owned subsidiary of UAE-based TAC Cyber ​​Security Consultancy LLC. The move is aimed at meeting the growing demand for advanced cybersecurity services in the Gulf Cooperation Council (GCC) region.

“Both solutions are part of the consistent development of TAC Security and focus on innovations in the cybersecurity space. “ESOF (Enterprise Security in One Framework) continues to be used by enterprises and governments around the world to combat evolving cyber threats, enabling the company to lead in end-to-end vulnerability management and cybersecurity solutions,” the startup said in a statement.

According to the statement, the new subsidiary in the United Arab Emirates will enable the company to diversify its customer base and provide cybersecurity services to cross-border clients across the GCC.

Earlier, TAC Infosec announced that it had acquired 590 new customers in first quarter of fiscal year 25of which 149 customers came from the USA. He already assured that he wanted to strengthen his global expansion.