Moneycontrol Pro Panorama | Tech stocks feel the squeeze. Time to rewire?

Dear Reader,

One97 Communications’ (Paytm) shares fell below the Rs 1,000-mark on January 14 before pushing back up to Rs 1,118 at the close. It was a new low for the recently-listed fintech, which made history with the largest ever public issue, but is now setting records that’s making investors see red. But it’s not alone in this respect.

Shares of some other recently-listed startups are also trading below their issue price. Even the jewel among consumer-targeted digital startups, FSN E-commerce (Nykaa), has seen its shares drop from a high of Rs 2,493 on December 1 to its current level of Rs 2,051 a share. But, it’s not just in India that tech stocks are feeling the heat.

Globally, tech stocks are being sold into. In today’s Financial Times selection (free to read for Pro subscribers), Richard Waters talks about how the Nasdaq has dropped 10 percent from its November high with high-growth stocks faring worse. He asks a question that investors in new-age tech stocks in India should also ponder over: “The main questions now are: how far does this adjustment have to run? And has something fundamental changed about the stock market’s attitude to tech that will filter through into a profound shift, putting a brake on the capital flooding into the sector and forcing a rethink of more expansive business plans?”

But don’t get unduly alarmed. While there may be a bigger fall awaiting some parts of the tech universe, the outlook for their business remains bright, he concludes.

While investors in new-age tech stocks may wonder what the future holds, those invested in the software services sector will be pleased to hear that their companies are reporting pricing power making a return. Management commentary indicates that clients have become more receptive to discussions around price hikes. That they are facing rising costs in their own operations is making them more sympathetic to vendors facing similar cost headwinds. How soon could these price increases make their way into financials? Read to know more.

If all this IT industry talk has whetted your appetite for more, then here’s Madhuchanda Dey’s take on Mindtree’s earnings, with its strong revenue performance, margin improvement and a robust outlook making up for what may appear to be an expensively valued stock. Do read.

Investing insights from our research team

​Weekly Tactical Pick | Lemon Tree Hotels

A defensive pick for a volatile market

Hikal: Closing recommendation due to environmental compliance red flag

What else are we reading?

Has pandemic increased inequality in India? NBER paper says no

Budget Chart of the Day | Will FII flows fuel markets, post-Budget?

The Green Pivot | A green Budget to move towards climate goals

Herd Immunity Tracker: A shorter recovery period appears to take the load off the system

Why a silver ETF should be a part of your portfolio

Algo Rhythm |The algo trading system development model: Part-II

Congress Vs TMC | Has Prashant Kishor woken the sleeping giant?

And in Personal Finance

Personal Finance | Investors should add equities to portfolio to shield returns from inflation

Technical Picks

Sun Pharma, Polycab, NMDC and HDFC Bank (These are published every trading day before markets open)

Ravi Ananthanarayanan

Moneycontrol Pro