Market Movers: Why Zomato shares plummeted and nothing seems to faze Infosys bulls

MUMBAI: On a day when came out with the most bullish report on on Dalal Street, shares of Zomato cheered the move by nosediving 8 per cent.

We are not suggesting that ICICI Securities’ bullishness is ill-placed or that investors revolted against the brokerage to show what they thought of the report. Perhaps, the main reason why the online food aggregator’s stock plummeted had nothing to do with ICICI Securities or the ongoing efforts on social media to get the company to pay more money to its “delivery” partners.

According to market participants, the fault for today’s slump in the stock may lie squarely on Zomato’s own success. Prior to today’s sell-off, shares of the company had jumped 70 per cent from their issue price of Rs 76.

For anchor investors, who had participated in the company’s issue last month, the gains made were too tempting to not cash in on, and that’s what a number of those investors likely did today. The lock-in period of 30 days from the day of allotment of shares ended today for Zomato’s anchor investors, which allowed them to sell their shares in the market if they wished. And they sold, alright!

Volumes on the Zomato counter soared 27 per cent from the previous session and more importantly, delivery volumes accounted for 46.5 per cent of the shares traded. For comparison, the five-day average delivery on the stock was mere 26 per cent. Who said institutional investors aren’t bothered by short-term returns.

Booster shot

You know the feeling you get after doing months of consistent hard work, meticulous planning and consistency to get those six packs? We don’t, but Healthcare does. The company’s months of meticulous effort and millions of dollars of investment have finally paid off after the Indian drug regulator approved the company’s Covid-19 vaccine for emergency use.

While late in the vaccine game, Cadila’s ZyCOV-D vaccine is still expected to do wonders for the company’s earnings going ahead. According to one brokerage firm, the vaccine jabs could add around $150 million to the company’s bottom line on an annual basis and the company expects enough demand to be able to sell at least 5 crore doses.

Nothing fazes the bull

For most companies, having your CEO called up to the finance minister’s office for botching up one of the most prestigious tax-related projects in the country would have had their investors biting their fingers off. But not Infosys shareholders.

The fact that Salil Parekh was summoned by the government to explain how exactly they managed to botch an already disastrous rollout of the new income tax filing portal should have elicited a more negative reaction from investors. If not anything, it raises serious questions about one of India’s bellwether IT companies’ ability to deliver projects.

And yet, such is the optimism for information technology stocks in India that the stock of the company ended the day in the green having started the day in the red. Investors have been chasing IT stocks for defensive cover for their portfolio given the ongoing carnage in smallcap and midcap stocks lately. That said, the stock was the lowest gainer in the Nifty IT index, which itself rose 1.7 per cent.

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