One 97 Communications Ltd. (Paytm) shares fell by almost 1% on Wednesday, closing at values below Rs. 400. The announcement that Surinder Chawla, the CEO and MD of Paytm Payments Bank, was resigning for personal reasons and to pursue better professional opportunities sent the stock into severe declines.
Recent bad news, legal activities, and concerns about corporate governance have all hurt the stock. Investors, both private and institutional, have been buying more shares in fintech companies despite the significant decline in wealth, leaving others unsure of whether to grab the "falling knife."
Market participants recommend that only those with a high risk appetite attempt to gamble on it, and that investors should evaluate their risk profile independently. Nonetheless, investors are advised by technical and fundamental experts to steer clear of Paytm at this time. They think that while the upside is limited for the counter, the stock may be heading for more declines.
According to Stock Market Today's founder, VLA Ambala, Paytm appears to be oversold throughout all significant time horizons. Its present RSI indicates a monthly, weekly, and daily time period of 28, 34, and 44. The market is still behaving bearishly since it is trading near its 20- and 200-day EMAs. At monthly time, it has produced an extremely pessimistic chart pattern known as a "bearish pennant."
Paytm should only be purchased by investors with a strong risk tolerance above the Rs 410 level, with a strict stop loss at Rs 340. Long-term goals can be set for Rs 500 to 600, but given the volatility of the counter, one should only maintain a small amount of exposure, the speaker said.
Ambala recommended against betting on Paytm for investors with a poor tolerance for risk, given all the regulatory issues. She said, "The company is going through its most difficult period and has never performed 'Horse,' so it doesn't appear enticing to me right now.
Foreign Direct Investment (FDI) shareholding in Paytm decreased to 60% from 66% during the quarter, while FPI shareholding increased by 2.49 percent to 20.19 percent in the March 2024 quarter. DII's ownership rose to 6.86 percent, while the shareholding of retail investors climbed to 14.53 percent in a consecutive manner.
At least one percent of the firm is owned by a number of well-known international funds, including Tiger Pacific Master Fund, Goldman Sachs (Singapore), Government Pension Fund Global, Societe Generale, and Morgan Stanley Asia (Singapore). For the three months ending March 31, 2024, domestic funds like Nippon Mutual Fund and Mirae Asset Mutual also increase their interest in the business.
One 97 Communications' (Paytm) shares are having difficulty crossing the 50-daily moving average, which suggests that weakening is imminent, according to Avdhut Bagkar, a technical analyst and derivatives analyst at StoxBox.
"A pivotal close above the 50-DMA, or Rs 422/mark, would indicate a rally to Rs 500 levels and indicate a breakout on the upside. Until then, the daily chart suggests that the price may retest the immediate support of the Rs 360 levels. Relative Strength Index (RSI), a strength indicator, is trading sideways, showing balanced momentum," the man stated.
Paytm's stock fell more than 37% in the quarter ending in March 2024, and it has lost 40% of its value in the past year. The stock has lost almost 60% of its value in the previous six months, but it has still lost 81% of its value from when it was first listed at Rs 2,150 per share.
Additionally, WealthMills Securities Director of Equity Strategy Kranthi Bathini stressed that Paytm should only be used by investors who have a high tolerance for risk and advised those with a lesser tolerance to avoid it. Unfavorable news has been putting a lot of pressure on the stock and raising questions about the company's prospects.
Before making any choices on the stock, Bathini suggested waiting to see the company's financial performance report for the quarter ending in March 2024 and the first quarter of the next fiscal year. He emphasized that the stock's trajectory in the next months would be greatly influenced by the financial performance and the switch to nodal banking.
