New age company stocks have taken a hit in the recent past, mirroring the trend seen on the Nasdaq, where investors suddenly lost appetite for highly valued tech firms. What does this mean, are the valuation discoveries to be blamed or the impending liquidity tightening?

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CNBC-TV18’s Nisha Poddar spoke to Rahul Arora, CEO of Nirmal Bang Institutional Equities, Safir Anand, Senior Partner at Anand & Anand, and Anurag Singh, Founder and General Partner of Ansid Capital, on how they view the future for these new stocks.

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Arora said, “I think this movie comes out once every 10 years, at the turn of the century, it was IT.com bubble, at the turn of the last decade, it was real estate, and now you are having these fintechs. So, I think this will play itself out. I think sanity will return, the euphoria will die a natural death, these companies may meanwhile continue to grow. But people will start putting their money where their mouth is, and they are not going to pay any price for loss-making companies with no return on equity and capital employed.”

Singh said, “Many investors are beginning to realise a very important lesson in investing, that a stock is a price, stock is a share in company's profits so it is only as valuable as the company's profits are. So, be it over exuberance or be it pessimism don't be afraid to invest. But ask the elementary questions. Where are the earnings, how will the sales growth percolate, where is the market share going to come from, what is the gross margin? These questions are timeless, and they are always valid.”

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Anand said, “India actually had an advantage, the meltdown in India and some of these companies had a lag effect compared to what was happening in the United States. So, somebody could have seen the meltdown there in some of these models and could have emulated that and even existed in time. So we are back to the fact that cash is supreme and everything around cash is how you should be buying the stocks.”

For full interview, watch accompanying video.

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