With Meesho shares surging to a new high, investors are left wondering what's driving this rally and how it will impact the broader e-commerce sector. Can this momentum sustain, and what does it mean for your investments?
Meesho's stock price jumped 9.4% to an intraday high of Rs 187, driven by UBS's Buy rating and a target price of Rs 220, implying a 22.2% upside from current levels. The company's asset-light business model and consistent positive cash flows have been major factors in this rally.
Meesho's growth levers, including a robust 30% CAGR in Net Merchandise Value (NMV) over FY25-30E, are driving investor interest. The brokerage firm expects NMV growth to be driven by a sharp expansion in annual transacting users and an increase in annual ordering frequency, even as average order values moderate.
Historically, the Indian e-commerce sector has shown significant growth potential, with the Nifty E-commerce index outperforming the broader Nifty index. However, trader psychology plays a crucial role in such rallies, and it's essential to consider the impact of market sentiment on stock prices.
Will Nifty fall after this news? The impact on the Nifty will depend on the broader market sentiment and the performance of other index constituents.
Is this good or bad for bank stocks? The rally in Meesho's stock is specific to the e-commerce sector and may not have a direct impact on bank stocks.
What should retail investors watch next? Keep an eye on the company's quarterly earnings and any updates on the e-commerce sector's regulatory environment.
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Disclaimer: Investing in the stock market involves risks, and investors should do their own research before making any investment decisions.
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