Indian investors still betting big on US tech stocks

Mumbai: Indian investors are still interested in the US tech companies, mostly the top-25 most transacted. Despite not so good earnings reports by some of the technology companies, net buying (buy - sell) volume has remained constant.

The 'Big Five' technology companies in the US (Apple, Amazon, Meta, Google, Microsoft) have announced their Q3 earnings. Vested Finance, a FINRA-registered US broker-dealer and an investment platform that enables Indian investors to invest in the US markets has spotted several interesting trends on their platform post the tech giants announcing their earnings.

Talking to Bizz Buzz, Viram Shah, co-founder & CEO, Vested Finance, says: "As we have seen, overall earnings have been quite decent, and there are reasons to be optimistic that companies like Apple, Microsoft, and Alphabet can continue to post substantial profits in the future. Also, supply chain issues, inflation and wage growth rate continue to be key themes that companies are grappling with, though supply chain bottlenecks and wage growth have shown some signs of easing. Also, the US economy showed signs of growth in Q3 after shrinking in the first half of the year. The annualized GDP growth rate of 2.6 per cent came in higher than expected. Finally, one can expect continued policy tightening by the Fed, but the pace of hike in the rates is expected to be slower." Overall, Indian investors continue to be interested in investing in tech stocks via Vested. The top nine stocks bought on Vested over the last 30 days are all tech stocks, he said. Average weekly buying volume per user has remained constant.

Some of the stocks have witnessed an increase in buying post the results. But on a week over week or month over month basis, the trend remained constant. Investors continue to invest in tech-based stocks, especially mega-caps and large-caps. Mega-cap stocks have been experiencing higher than average volatility in recent times. Lower earnings growth and a tightening of Fed rates could mean they may expect more pain in the short term.

Asked why no major buy or sell trend spotted for Meta stocks even after the prices went down post earnings announcement, he said: "Well, two factors will work in favour of large-cap and mega-cap stocks. First, consumption in the USA hasn't slowed down. So, the more prominent companies will continue to attract consumers despite a general slowdown across industries. This will benefit large-cap and mega-cap companies in generating steady cash flows".

Secondly, with the rise in uncertainty due to inflation and war in certain developed countries, investors will rush to buy the large-cap and mega-cap operating globally to diversify their portfolio and minimize the overall risk, he added.

According to him, the companies are largely mentioning that the price per ad has decreased, but the overall usage of the app has increased. For example, for Meta which owns Facebook and WhatsApp, as per the company reports, the number of ad impressions has increased by over 17 per cent year-on-year, while price per ad decreased by 18 per cent year-on-year. Interestingly, fastest user growth for WhatsApp is in North America now with global daily app users (DAU) crossing 2 billion. Companies are optimistic about the long-term prospects and most companies have mentioned that there can be short-term volatility in the business.

In this backdrop, some investors may find an opportunity in mega-cap stocks given their strong financial and steady cash flows. These companies have sufficient capital to withstand market fluctuations and may be in a better position to weather out the storm, he added.