In morning trade of this Friday, May 10, Paytm, the leading online payments platform, experienced a notable surge, hitting the 5% upper circuit limit on the BSE. This surge came in response to the company’s clarification regarding media reports that inaccurately suggested Aditya Birla Finance and others had invoked Paytm’s loan guarantees.
Starting the day at Rs. 340 apiece on the BSE, the stock quickly gained momentum, marking a 2% increase from the previous day’s close of Rs. 333.3. The rally continued as shares soared to Rs. 349.95 apiece, hitting the upper circuit limit and boasting a total market capitalization of Rs. 22,250 crore.
This surge marks the second consecutive day of gains for Paytm, which had been experiencing a downward slide over the past 10 sessions. The stock had already witnessed a 5% gain on Thursday, indicating a positive shift in investor sentiment after the recent travails faced by Paytm.
Despite its recent gains, Paytm shares have been struggling on Dalal Street, having plummeted approximately 69% from its 52-week high of Rs. 998.30, which it reached in October 2023. In total, the stock has erased more than 85% of investors’ wealth from its IPO price of Rs. 2,150.
However, technical analysts studying the bourses suggest that Paytm is currently in a corrective phase, but is showing signs of potential upside. Although the stock remains in negative territory, it has found support around the Rs. 310 level after a gradual decline. This support, coupled with rising volume participation, indicates a possible pullback with an improvement in bias, anticipating further rise.
The Relative Strength Index (RSI) has signaled a trend reversal from the highly oversold zone, indicating a buy and suggesting a positive move ahead. Analysts expect an initial target of Rs. 370-374 levels, with the stock trading in a sideways zone and support placed at Rs. 305, its all-time low zone.
On the upside, the first resistance is anticipated around Rs. 370, where the 20-day moving average (DMA) is situated. Beyond that, a major resistance is expected at Rs. 400, marked by both psychological resistance and the 50 DMA.
In summary, Paytm’s recent surge in stock price, coupled with technical analysis indicators, suggests a potential turnaround for the fintech platform amidst its ongoing corrective phase. Investors are cautiously optimistic as the stock shows signs of stabilizing and potentially regaining lost ground.
