India's long-standing ambition to create a marketplace for consumer-centric tech start-ups has taken another step forward as digital payments giant Paytm has led an $6 billion stock market rally among peers this year.
One 97 Communications Ltd., the company that owns Paytm, saw a 69 per cent increase in share price and a $2.7 billion increase in market value following an earlier-than-expected increase in profitability. Zomato Ltd., a food delivery platform, and PB Fintech Ltd., which runs Policybazaar, have seen increases of 28 per cent and 47
per cent, respectively, adding more than $1 billion to each company's market valuation.
Paytm and its peers have risen even as shares of the country's old guard of IT service providers, such as Tata Consultancy Services Ltd. and Infosys Ltd., have fallen due to concerns about global economic weakness. Concerns about the financial health of formerly high-flying startup Byju's have also been dispelled by the rally in new-age tech stocks.
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All though Paytm has made gains this year, shares of Paytm are still trading below 60 per cent of their IPO price in November 2021.
A big push for the country's tech unicorns in 2021 by the government and high-profile investors like Jack Ma and Masayoshi Son led to a global selloff in the sector last year due to concerns about higher interest rates and a recession. Stock market declines and some underwhelming market debuts compelled changes.
The recovery in global tech shares, which saw the Nasdaq 100 up by 38 per cent this year and reverse its decline in 2022, was followed by a recovery in India's new economy stocks. The sector has reclaimed its status as a safe haven from pandemics, despite the fact that macro concerns have hardly subsided. This has been made possible in part by enthusiasm for the potential of emerging technologies like artificial intelligence.
