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Sunday, January 23, 2022

New-age technology stocks will remain under pressure even in 2022, know what should be the investment strategy in them now

The year 2021 has been very important from the point of view of listing of new age technology based stocks. These stocks broke the traditional valuation norms and made a presence in the primary market. Loss-making new-age tech companies approached the IPO market with expensive price tags on the back of attractive growth prospects.

Barring Paytm’s operator One 97 Communication, most of these new age tech companies were listed in the market with a hefty premium. New retail investors who are closely associated with these companies in their everyday lives showed strong interest. The craze of new investors was such that the IPOs of these companies were filled manifold. However, various apprehensions were expressed on social media and other platforms regarding their valuation, their business model and their current business and profitability position.

Not all market giants are very excited about the future of companies like Zomato, Paytm, CarTrade Tech. Experts say that now the era of heavy liquidity and low interest rates is on the verge of ending. In view of rising inflation, there are signs of increasing interest rates again. As a result, high valuation technology stocks are unlikely to turn profitable in the near term. All technology stocks in the US are currently going through a downtrend. In the US markets, investors are shifting from expensive valuation stocks to cheaper and quality stocks. It is expected that now the central banks all over the world will be seen slowly returning to increasing interest rates. In such a situation, the liquidity in the market will be seen decreasing. Which will have an impact on these expensive valuation new age tech stocks first.

These 10 stocks showed a jump of up to 25% in the first half of the last 3 years, do you have any?

If we look at the domestic market, One97 Communications, CarTrade, PB Fintech and Fino Payments Bank made a bang in the market. But currently they are seen to be 9 to 50 per cent below their IPO price. Similarly, FSN E-commerce, the parent company of Zomato and Nykaa, is seen at 21 per cent below its listing price.

In this situation, all the new age start-up companies engaged in the preparation of listing have cut their IPO price. The IPO of MobiKwik has been postponed due to the fall of up to 50 per cent in the share price in the unauthorized market.

Market experts say even a mild hike in interest rates can have a huge impact on the future growth prospects of such companies. This will have a greater impact on companies whose valuations had become very expensive in the era of low interest rates and which were benefiting from the huge liquidity in the market during the COVID-19 epidemic.

Amit Kumar Gupta of Adroit Financial Services It is said that the pain of technology-based companies of the new age has only just begun. This year, the business of these companies may see a decline of 50-60 percent. Retail investors who are fresh into the market investing in these new technology-based companies with renewed vigor are likely to be hit the hardest.

In the portfolio of some retail investors, the investment in such new companies is as high as 20-40 per cent. Given this, it is not difficult to estimate the risk of these investors. However, Amit Kumar Gupta also says that there are some tech stocks in this crowd whose business model is very good and their business is expected to grow well in future. In such a situation, investors would be advised to wait till the second half of FY 2022 to come to a good valuation of these stocks. Then after that invest in them.


Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.
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