Ukraine tensions intensify selling on D-Street; 10 firms lose market value

Amid the ongoing uncertainty on Dalal Street, the market value of at least 10 companies on the BSE have declined by over Rs 25,000 crore in the past 35 trading sessions since January 1, 2022. The benchmark equity index BSE Sensex retreated 570 points, or 0.97 per cent, to 57,683 on February 21 from 58,253.82 on December 31 last year.

Market watchers believe that a couple of factors, such as sustained selling by foreign institutional investors (FIIs), rising crude oil prices and tensions between Russia and Ukraine, dented sentiment in the ongoing year. The 30-share index traded 957 points, or 1.66 per cent, down at 56,726 in the morning trade on February 22.

VK Vijayakumar, chief investment strategist, Geojit Financial Services said, “Escalations in Ukraine tensions with Russia recognising two pro-Russian rebel regions have aggravated the crisis. The economic consequences are already visible in higher crude and gold prices. The situation remains fluid; we don’t know whether the tensions will escalate or be contained from now on. The biggest macro headwind for India is crude racing to $97.”

There are expectations that the inflationary consequence of rising raw material prices will force the Reserve Bank of India (RBI) to abandon its dovish monetary stance.

Data available with Ace Equity showed that investors have lost Rs 79,217 crore in Wipro as the market capitalisation (m-cap) of the IT firm declined to Rs 3,12,804.75 crore on February 21, 2022 from Rs 3,92,921.38 crore on December 31 last year. Shares of the company slipped more than 20 per cent to Rs 570.65 during the same period.

Brokerage Anand Rathi Shares and Stock Brokers sees Wipro as an attractive bet post-correction. “Wipro has been under pressure for quite some time but at this juncture, it is trading near its crucial support. On the daily chart, there is a bullish ‘Special Gartley’ pattern which is looking lucrative. Thus, we advise traders to go long in the stock with a stop loss of Rs 530,” the brokerage said, adding Wipro may hit Rs 629 by March 17.

Infosys is next on the list in terms of wealth erosion. The market cap of the company declined by Rs 66,836 crore to Rs 7,27,878 crore. Investors also lost their money in newly listed firms. Where the market value of food delivery firm Zomato declined by nearly Rs 44,000 crore YTD, digital payments company One 97 Communications (Paytm) and parent company of beauty e-tailer Nykaa, FSN E-Commerce Ventures witnessed a fall of Rs 34,215 crore and Rs 36,507 crore, respectively. Shares of Zomato, Paytm and Nykaa have slipped around 40 per cent, 40 per cent and 37 per cent, respectively, YTD.

ICICI Securities on February 18 gave a ‘Buy’ rating to Paytm with a target price of Rs 1,352. On the other hand, global financial services firm Macquarie on February 7 maintained an ‘Underperform’ call on the stock with a price target of Rs 700.

“Paytm reported loss of around Rs 780 crore in Q3 led by large ESOP cost. This pertains to large ESOP grants by the company before its IPO and will be a recurring annual expenditure of around Rs 1,600 crore going forward. Net payment margin expanded in Q3 to 8 basis points of GMV which was encouraging. Distribution business still is sub-scale as Paytm distributed only merchant and personal loans which form just about 2 per cent of overall loans (by volume),” Macquarie said.

Among the other major losers, the market value of Larsen & Toubro Infotech, Housing Development Finance Corporation, Tech Mahindra, Avenue Supermarts and HCL Technologies have also declined between Rs 25,000-42,000 crore since the beginning of the ongoing year.

On the other hand, m-cap of Adani Green Energy, State Bank of India, Maruti Suzuki and Axis Bank grew by Rs 98,111 crore, Rs 45,873 crore, Rs 35,798 crore and Rs 33,873 crore, respectively, YTD.

Going ahead, Parth Nyati, founder, Tradingo advised investors to zero in on capital goods, infrastructure, real estate, banking, consumer goods and auto ancillaries space. “We advise investors to look for buying opportunities in these areas,” he said.

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