Paytm, Zomato hit new lows, Nykaa corrects nearly 45% from its 52-week high—What should investors do with new age stocks?

Shares of new age stocks continue to face selling pressure over stretched valuations as these shares have dropped nearly 50% from their 52-week highs in the past 6 months.  

On Wednesday, continuing the losing streak, stocks of One97 Communications, Paytm’s parent, and Zomato traded on new lows, while FSN E-Commerce (Nykaa) gained more than 2% after correcting by nearly 45% from its high.  

Paytm declined nearly 4% from its previous closing to trade at Rs 572.25 a share, while Zomato dropped by Rs 1 to hit new low of Rs 75.55 per share on the BSE.  

At today's low of Rs 75.55, Zomato has so far declined more than 55% from its 52-week high. Similarly, Paytm dropped more than 70% on its 52-week high of Rs 1961.01. Shares of beauty and products e-commerce company, Nykka, declined nearly 45% from its 52-week high of Rs 2574 a share on the BSE. 

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Shares of new age stocks like Paytm, Zomato, Nykaa have been witnessing free fall apparently over high valuations, say experts. Besides, Paytm has also been marred with controversies of late. The company has vehemently denied data leak to Chinese firm and has also assured its customers of requisite steps to address concerns related to Paytm Payments Bank (PPBL) after the Reserve Bank of India barred it from onboarding new customers. 

Expert is of the view that long-term story of the share remains intact, However, investors should refrain from adding new age stocks at current juncture. 

Proficient Equities Limited founder and director Manoj Dalmia Founder says investors should reduce exposure in new age stocks like Paytm, Zomato etc as they face massive selling pressures from investors. "The valuations they ask are huge and are based on future business scope and not on present business," he added.  

Dalmia suggested investors to keep a small portion allocated in these stocks and go for other established businesses in small and midcap sectors with a strong business framework,” Dalmia added.     

Meanwhile, in related developments, Zomato Ltd has acquired a 16.66% stake in Mukunda Foods Private Limited, a food robotics company, for $5 million and Munish Ravinder Varma resigned as non-executive, non-independent director of Paytm due to personal commitments and other pre-occupations.  

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)