Paytm Shares Tumble 9% Following 2-Day Rally; Reports Suggest A Likely ED Probe

Paytm shares dropped over 9% in Thursday's early trade, breaking a two-day winning streak. The digital payment giant, One 97 Communications Ltd, witnessed a surge earlier in the week, but investors swiftly moved to book profits.

Paytm shares had soared, being locked in a 10% upper circuit for two consecutive days. The recent rally followed a challenging period, with the stock experiencing three consecutive lower circuits on Thursday, Friday, and Monday, each resulting in a 20% drop. The circuit filter was then adjusted to 10% on Monday.

Amid the market turbulence, an Economic Times report suggests that a comprehensive probe may be in the cards for Paytm. The Reserve Bank of India (RBI) is expected to provide crucial information, and the Enforcement Directorate might formally investigate issues highlighted by the RBI. ET sources indicate that Paytm's founder, Vijay Shekhar Sharma, has been directed to engage directly with the regulator.

Last Wednesday, the RBI dealt a blow to Paytm Payments Bank Ltd by prohibiting it from accepting deposits or facilitating credit transactions, top-ups, or any activity in customer accounts or related prepaid instruments like wallets and FASTags after February 29. Despite this, customers will still have unrestricted access to their account balances, according to the RBI order.

On the technical front, the 14-day relative strength index (RSI) stands at 29.6, signalling that Paytm's stock is currently in oversold territory. This suggests a potential rebound, supported by the stock's low volatility, indicated by a one-year beta of 0.2.

Paytm made its stock market debut in 2021 with high expectations but has faced a tumultuous ride. The stock, priced at Rs 2,150 per share during the initial public offering (IPO), has witnessed a staggering 80% decline. This downturn has positioned Paytm as one of the significant wealth destroyers in recent times.

As of 11:25 am on the National Stock Exchange (NSE), Paytm shares were trading at Rs 460.60 per share, reflecting a more than 7% decline. Over the last year, the stock has endured a cumulative drop of nearly 16%.

Paytm's current market performance has left investors and industry experts speculating about its future trajectory. The regulatory scrutiny and recent market volatility have added to the complexity. As Paytm strives to navigate these challenges, all eyes are on how the fintech giant will adapt and recover.