Nykaa Wins Back Investor Confidence As Stock Surges

New-age stock Nykaa surged over 10 per cent in the morning deals today, beating market expectation that the stock will come under intense selling pressure.

F S N Commerce Ventures (Nykaa) made its market debut on November 10 last year after a successful initial public offer (IPO). Regulations had barred pre-IPO investors from trading in shares for one year. It is pertinent to note here this lock-in expiry will have no impact on the business fundamentals of these startups.

The lifting of curbs on Thursday had sparked speculation that the stock will come under pressure with pre-IPO investors looking for exit. In Nykaa, 67.20 percent outstanding shares will become eligible for trading on November 10, according to J M Financial.

The stock moved in tune with the broader market which is trading over 1,000 points higher. Investor sentiment got a boost as easing inflation numbers in the US have raised hopes that an end to Fed Reserve's rate hike is in sight.

Despite over 10 per cent rise today, Nykaa's current market price is way below its 52-week high of Rs 429.86 recorded on November 26 last year. 

The steel fall in Nykaa was in tandem with the decline in other new-age tech stocks. Investors have cast doubts over the profitability of valuation of these tech startups.

Earlier in July, another new-age stock Zomato had come under intense selling pressure when the lock-in opened for institutional investors.

The company board had earlier approved a bonus issue of equity shares in the proportion of 5:1.

"The company believes that Bonus Shares will encourage the participation of retail investors in the long term, as well as see a wider shareholding," it had said.