Nykaa down 24% in one month, bows out of top-100 valued firms' club

The sharp selloff in Nykaa has come ahead of the end of one-year post IPO lock-in period, which ends next month.

Shares of FSN E-Commerce Ventures (Nykaa) continued to reel under pressure and hit a new low at Rs 975.50 on the BSE in Friday’s intra-day trade in an otherwise firm market. The stock of the online fashion retailer quoted lower for the third straight day, falling up to 15 per cent during the period. In comparison, the S&P BSE Sensex was up 0.32 per cent at 59,948 at 09:54 AM today.

The stock of Nykaa hit the lowest level since its listing in November last year and has fallen 24 per cent in the past one month. In comparison, the S&P BSE Sensex has rallied 6 per cent in the same period.

With the recent fall, the market price of Nykaa has tanked 62 per cent from its record high level of Rs 2,574, which it touched on November 26, 2021. The company made its stock market debut on November 10, 2021.

The sharp sell-off in Nykaa stock has come ahead of the end of one-year post-IPO lock-in period, which ends next month. Selling pressure is seen whenever the lock-in period meant for IPO anchor investors ends, particularly in companies backed by private equity investors.

A sharp decline in stock price has led Nykaa to lose its place in the list of the India's 100 most valued companies in terms of market capitalisation (market cap). Nykaa’s market cap fell below Rs 50,000 crore to Rs 46,292 crore in intra-day trade. The company has lost a market cap of Rs 75,857 crore from its all-time high of Rs 1.22 trillion. On Thursday, Nykaa stood at 100th ranking with a market cap of Rs 49,787 crore, the BSE data shows.

FSN E-Commerce Ventures, more commonly known as Nykaa, is a consumer technology platform, delivering a content-led, lifestyle retail experience to consumers through its diverse portfolio of beauty, personal care & fashion products including their own brand products.

The company’s maiden bonus issue announcement failed to cheer investors, which it had approved on October 3, in the ratio of 5:1 i.e. five bonus shares for every one share held in the company. Since then, the stock has declined nearly 8 per cent.

Meanwhile, Nykaa on Thursday announced the appointment of Rajesh Uppalapati as its chief technology officer (CTO), with effect from November 1. Sanjay Suri, the current CTO of Nykaa, will step down on November 1 and be replaced by Uppalapati. 

Technical View

Bias: Negative

Support: Rs 975

Resistance: Rs 1,030; Rs 1,120

The stock witnessed a steep fall since the start of this month, and is now seen trading in oversold territory. The sharp intra-day pullback in today's trade, indicates that the stock may seek support around Rs 975-level, the day's low.

As per the daily charts, the bias is likely to favour the bears as long as the stock trades below Rs 1,030 - its lower-end of the Bollinger Band. 

Similarly, the stock is also trading with a negative bias on the weekly chart, way below its lower-end of the Bollinger Band, now placed at Rs 1,120-odd level. Thus, the bias both on the daily and weekly scale are clearly negative for the stock.

However, given the magnitude of the fall, the RSI in particular along with Slow Stochastic are treading in oversold conditions. Hence, a relief rally in the near term cannot be ruled out.

In case of a pullback, the stock is likely to face considerable resistance around Rs 1,120 - Rs 1,150 range.

(With inputs from Rex Cano)