Market Movers: What’s driving the carnage in Nykaa, Zomato shares?

The company listed with stellar gains making its founder one of the richest women in the world. However, since hitting its record high on November 26, the stock has plummeted 15 per cent, including today’s over 5 per cent fall.

While some of the correction is being driven by a contraction in valuations led by investor concern around rising cost of capital as global central banks look to accelerate their normalisation process of pandemic-era easy money policy, a large part is driven by front-running by some traders.

In the coming days, Nykaa’s anchor investors will be allowed to sell their shares. Those who bought the stock at the issue price of Rs 1,125 are sitting on handsome gains of close to 100 per cent despite the current sell-off.

Traders expect an encore of what happened in the case of

, wherein, anchor investors were quick to offload part of their stake to realise astounding profits.


Zomato on a slippery slope

After some surge in the early parts of November, shares of Zomato have again appeared to have lost their zing that carried them to their record high on November 16. In the course of the past 20 days, the stock has lost more than 18 per and looks set to enter its first bear market since listing in July.

Unlike Nykaa, Zomato does not have the cushion of a positive bottom line. With investors, globally, pricing in a hardening of interest rates in 2022, companies such as Zomato, whose valuations depend on low cost of capital, are usually in the firing line, much like tech companies in the US.

Zomato, therefore, is battling a sobering of its sky-high valuation in price-to-sales terms and emerging doubts among retail investors, who are seeing their first tangible correction after March 2020.


Revival is brewing at

For the many retail investors who backed the telecom operator when others sought exit, the past week has been about sweet redemption.

Shares of the company have risen exorbitantly over the past week, including today’s nearly 2 per cent in a weak market.

Given the lifeline provided by the government to the sector a few months ago, investors are now focused on the company’s capital raising exercise. Vodafone Idea is still on the lookout to raise funds to meet growth requirements. The chatter on the Street suggests that some marquee investors may finally be showing interest.

However, what would be more important is the backing of the company’s promoters — Aditya Birla Group and Vodafone Plc — as any new investors coming in would like to know if the promoters themselves believe in the company.