A lot of speculation was floating in the market whether to invest in Paytm or not, due to the very high share price which was ₹2150 in the Initial Price offering. The success of Nykaa drove a lot of investors to try to cash in on Paytm being a highly anticipated option. Similarly, Zomato being a leader in food delivery alongside Swiggy was thought to have a lot of potential, however, currently, these share prices are plummeting and many first-time investors are scared.
Shares Dropping since Listing
Paytm shares have been under duress ever since their listing. Shares of One97 Communications, the parent company of Paytm, were deep in the red as the anchor lock-in period of 30 days since the listing ended on December 15. While the food delivery platform Zomato got listed in July 2021 and is up more than 30% from its IPO issue price of ₹76.
At the share price of ₹917, selling Paytm doesn’t seem feasible. Alternatively, holding the shares while booking small-time profits to cover up the loss while the market turns bullish again might be a better strategy.“Paytm will use its strengths to enter new businesses. If Paytm manages to emerge as a leader in a particular business then it can be expected to buy at lower interest rate otherwise it may take many years to reach its peak valuation,” said Parth Nyati, founder of Indian trading platform Tradingo.
While according to Ravi Singhal, Vice Chairman, GCL Securities Ltd, Paytm stock is highly valued at these levels, and only long-term investors should hold for a target of 2,400 in the next two years. On the other hand, Zomato shares are looking weak on chart pattern and it may go up to ₹75 levels after giving successive breakdowns at ₹110 and ₹100 apiece levels, suggests Sumeet Bagadia, Executive Director at Choice Broking.
Should Investors consider IPOs?
This has certainly shown that IPO listings are quite volatile and success is not guaranteed. Thus, it is crucial to research the market wave beforehand and only invest in the risky options using the money that is surplus. It might be a good option to seek advice from experts aware of the risk-reward ratio with an analytic viewpoint.
The market is collapsing, and almost all stocks are at all-time lows. The Sensex has dropped 3300 points in 5 days and the Nifty has crashed around 1000 points, making it a time for the opportunity to average out the shares bought at the minimum possible rates and keep track of trading in profits.
This might not be a time to sell but to hold the shares and wait for the bearish market to get out of the ditch. Also, holding back until progress starts and the red turns to green can make the losses minimum as compared to now.
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