Paytm share price jumps 5% after hitting upper circuits for 2 days in a row

Paytm share price opened at ₹415.60 against its previous close of ₹405.85 and rose 4.93 per cent to hit its intraday high of ₹425.85. Around 12:15 pm, the stock traded nearly 3.45 per cent up at ₹419.85, indicating a potential continuation of its upward trend for the fourth consecutive session.

Paytm share price hit its 52-week low of ₹318.35 on February 16, 2024, after the RBI’s action against Paytm Payments Bank (PPBL). At the current market price of ₹420, the stock is up 32 per cent from its 52-week low.

Also Read: Paytm issues FAQs: What will work after March 15? Here’s what users must know

The Reserve Bank of India (RBI) had directed PPBL to wind down services from March 15 after it was subjected to regulatory scrutiny due to non-compliance with KYC norms and other mandated processes.

However, on March 14, just a day ahead of the closure of PPBL, the National Payments Council of India (NPCI) granted Paytm a Third-Party Application Provider (TPAP) licence.

Also Read: Paytm gets a third-party license from NPCI. What does this mean for you?

This offered a big relief to One 97 Communications, the parent company of Paytm, as its shares hit a 5 per cent upper circuit the following day.

Meanwhile, brokerage firm YES Securities upgraded Paytm stock to a ‘buy’ from a ‘neutral’ and raised its target price to ₹505 per share from ₹350 earlier.

YES Securities underscored that Paytm’s declining dependence on the wallet business for revenue, the NPCI licence for a Third-Party Application Provider (TPAP), well-contained client loss due to reputational damage, rising partner addition and the competitive DNA of the company were the key reasons behind the rating upgrade.

Also Read: Paytm upper circuit: Stock gains 5% as Yes Securities upgrades stock to ‘Buy’, raises target price

Can the stock rise more?

Some technical analysts have highlighted favourable technical indicators, expressing confidence in the potential for further upward movement in this stock in the short term.

Rahul Ghose, CEO of Hedged.in, underscored that the Paytm stock after the series of newsflows has formed a double bottom around the ₹325-odd level which should act as a near-term floor for this stock.

Ghose said the near-term resistance in the counter is around the ₹450 level. One should watch out for two bullish candle closings above this price, which can lead to a further 10 per cent rally in the counter.

KKunal V Parar, VP of technical research and algo at Choice Broking underscored that on the daily chart, the stock has formed a bullish reversal pattern known as an ‘Ugly double bottom’ formation. Currently, the stock is trading near the neckline of this formation. A breakout above this neckline would confirm the pattern and potentially lead to a significant upward move in the stock.

The stock has recently crossed above its 20-day moving average, indicating a positive trend in the stock’s price movement. The weekly momentum indicator is approaching a strong support level, suggesting a potential rebound in the stock, Parar observed.

A Bullish Harami Candlestick formation has emerged on the weekly chart, reinforcing the bullish sentiment and signalling a likely upward movement in the stock, Parar pointed out.

“Considering these technical indicators, there is an expectation of substantial upside potential in the stock, possibly up to the level of ₹450, which coincides with the neckline resistance. A breakout above this level could target ₹550. A strict support level is at ₹360,” said Parar.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.ls

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Published: 20 Mar 2024, 12:33 PM IST