The shares of One97 Communications Limited, the parent company of the digital payments entity Paytm, surged 5% to hit the upper circuit on Tuesday, marking the third consecutive day of such gains. This positive streak has seen Paytm shares rebound by 16% over just three trading sessions, offering a glimmer of hope to investors after enduring a tumultuous month that witnessed the stock plummeting by over 50%. The decline was triggered by regulatory actions from the Reserve Bank of India (RBI) against its associate, Paytm Payments Bank Limited (PPBL).
Multiple factors have contributed to the recent uptick in Paytm's stock. Firstly, the company has reassured its users and merchants that its core payment services will remain unaffected. Additionally, optimism surrounding Paytm's stock has been bolstered by the RBI's decision to extend the deadline for PPBL to halt key operations. The RBI's detailed FAQ further affirmed that crucial operations integral to Paytm's business, such as QR code, Soundbox, and card machine functionalities, will continue uninterrupted.
Furthermore, Paytm's collaboration with Axis Bank to streamline merchant settlements has also spurred confidence among investors. Amidst these positive developments, recent media reports citing government sources indicated that the Enforcement Directorate (ED) found no foreign exchange violations at Paytm Payments Bank, attributing any lapses to Know Your Customer (KYC) procedures. However, it's crucial to note that the ED has yet to release an official statement regarding its ongoing investigation.
Despite these encouraging signs, the future trajectory of Paytm's stock remains uncertain. Global brokerage firm Jefferies recently announced the cessation of its coverage of the stock, citing the predominantly negative news flow. This underscores the persistent volatility surrounding Paytm's stock, with its future performance hinging heavily on its ability to sustain operations seamlessly beyond March 15th. Investors are advised to proceed cautiously given the unpredictable nature of the market dynamics surrounding Paytm's stock.
