US new-age, hot tech stocks lose favour among Indians

Mumbai: Indian investors, who preferred to bet directly on the popular technology and new-age stocks listed in the US in recent months, have begun shifting away from them in the wake of the sell-off that has hit sentiment. Brokers and analysts said these investors are now focusing on shares of larger and more established companies that are expected to withstand the impact of the monetary tightening in the US."Several investors on our platform started booking profits from mid-December. Tesla, Robinhood, Netlifx are amongst the stocks in which investors looked at booking profits," said Sitashwa Srivastava, co-founder, Stockal - a platform that allows Indians to buy US-listed shares. "On the other hand, stocks like Facebook, Microsoft and Goldman Sachs have been amongst the popular stocks and have seen high trading volumes in the recent past."The benchmark Nasdaq index, which features the world's largest tech companies, fell 15% during January so far while some of the specific stocks like Netflix lost 30-40% of their market cap, data showed. The downward pressure on shares of new-age businesses, which have been in vogue since the start of the pandemic in late March 2020, is expected to intensify in the wake of the hawkish outlook given by the US Federal Reserve, say market strategists.A section of the domestic retail investors had opted to ride the bullish momentum in these shares in the past year by buying shares directly through various platforms. Many others invested in US-focused funds of local mutual funds.With the momentum getting disrupted due to the hawkish outlook of the US Federal Reserve, the risk appetite of these traders is expected to reduce."Due to the Fed outlook, a derating of price to earnings (PE) multiples is possible across various pockets of the equity markets and stocks of so-called 'high growth' technology companies with no cash flows would be the most impacted in the coming days," said Ritesh Jain, economic advisor, Old Bridge Capital Management.Until recently, investors cheered any incremental positive news coming from a technology company and the stocks often witnessed steep rises due to such news. "Now, while the upside to the stocks will be capped, any negative development or sub-par financial performance will be met with steeper sell-off," Jain added.The US and other global equity markets surged significantly post May 2020 aided by various liquidity measures taken up by central banks in wake of the Covid-19 pandemic. The new-age companies are amongst the biggest beneficiaries of this as Nasdaq Composite almost doubled since April 2020 lows and in 2021 the index grew by over 20%.Market experts say some of the leading technology stocks may prove to be an exception to the rule on account of strong business and good cash flows. This portfolio realignment comes after some of them took a beating in the past two weeks. "Some traders with a short-term outlook towards technology are looking to pare down their exposure to near-term volatility," said Viraj Nanda, CEO, Globalise, a platform for global investing.

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