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Dr. VK Vijaykumar, Chief Investment Strategist at Geojit Financial Services is of the view that the “disastrous” listing of Paytm has dented the euphoria and market sentiments have taken a knock.
The beginner's charm seems to be fading for most debutants on D-Street this year. Whether it is Sigachi, Sapphire Foods India, Zomato or PB Fintech, shares of the newly listed companies corrected in Monday's stock market mayhem, with some falling even more than 10 percent.
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Among newbies, Paytm, India’s largest initial public offering (IPO) this year failed to cheer the market on the first trading day on November 18. Since then, the stock has lost well over 40 percent, eroding almost Rs 39,000 crore of investor wealth since its listing.
The drop in the shares of most new-age companies has coincided with the wider meltdown in the markets. On Monday, indices fell for the fourth straight session and recorded the biggest fall in the past seven months.
According to most analysts, a correction was overdue in the Indian market.
"The correction was much needed and is going to be healthy. We were running beyond fundamentals and the pricing of IPOs was beyond market expectations,” AK Prabhakar, Head of Research at IDBI Capital, said.
Multiple factors were at play including looming fears of fresh lockdown in parts of Europe and Australia and market couldn't ignore them for long, said another expert.
Dr. VK Vijaykumar, Chief Investment Strategist at Geojit Financial Services, cited triggers for the correction—warning by RBI, downgrading of India by foreign brokerages on excessive valuations, sustained selling by FIIs and fresh COVID-19 waves in parts of Europe and lockdowns in countries like Austria.
He is of the view that the “disastrous” listing of Paytm has dented the euphoria and market sentiments have taken a knock.
“Valuing new-age tech stocks is extremely complex. Valuations are driven by hope,” he told CNBCTV18.com.
Here’s how newly listed stocks performed on November 22
Sigachi Industries Limited: The stock that hit the market on November 15 was closed 5 percent lower Rs 543.55 a piece on the Bombay Stock Exchange (BSE). Sigachi had made a blockbuster secondary market debut last week with shares listing at a premium of around 250 percent over the issue price.
Paytm: The shares of One 97 Communications Ltd, the parent company of the digital payments platform, extended losses and ended over 13 percent lower at Rs 1360.30 on BSE. Paytm had a lukewarm debut on November 18 with its shares listing at a 9 percent discount to its issue price of Rs 2150. The stock crashed 27 percent at close that day.
Sapphire Foods India: The KFC and Pizza Hut operator’s stock ended almost 4 percent lower at Rs 1171.65 per share. The company also debuted in the secondary market on November 18 and received a strong response. Shares were listed at a 14 percent premium at Rs 1,350 per share on the NSE against the IPO issue price of Rs 1,180.
Zomato: The food aggregator’s stock plunged over 11 percent during today’s volatile trading session. It, however, trimmed losses that ended nearly 3 percent lower at close. The food delivery company Zomato hit the secondary market in July with its shares listing at a premium of more than 50 percent to its issue price.
PB Fintech: The stock of the firm that owns Policybazaar and Paisabazaar too declined more than 10 percent during today’s trade. It ended 6.60 percent lower at Rs 1243.10 apiece on BSE.
FSN E-Commerce Ventures: The stock of Nykaa’s parent company was down nearly one percent at Rs 2097.80 per share. The beauty and fashion retailer listed with gains of over 80 percent on November 10. It also hit a market cap of Rs 1 lakh crore on debut, making it the 55th highest valued company in India in the listed space.
SJS Enterprises: The manufacturer of decorative aesthetics products had witnessed a muted debut on the bourses on November 15. Today, the stock was down 6.21 percent at Rs 439.80 apiece.
Fino Payments Bank: The stock slid almost 12 percent to Rs 397.10 per share on BSE. On November 12, the company’s shares had listed at a discount of 5 percent to the issue price of Rs 577 of its initial public offer (IPO), which was subscribed two times.
Paras Defence and Space Technologies: The company had made headlines for its being the best debut so far in 2021, until October. It had clocked listing gains of 170 percent on BSE. Today, the stock was down 5 percent at close.
(Edited by : Ajay Vaishnav)