Paytm shares dropped to Rs 1,558.80 apiece on NSE in the early trading hours, marking the lowest level seen by the stock since mid-August. The sharp selloff pushed the fintech firm’s market capitalisation below the Rs 1 lakh crore mark.
The shares recovered some losses later, trading 5% lower at Rs 1,641 apiece around 11 am, while the company’s market capitalisation rose back above Rs 1.05 lakh crore.
Despite the partial recovery, the stock remained deep in the red, snapping a three-session gaining streak.
Also read |Paytm, Mobikwik, Pine Labs shares crash up to 10%. What’s behind the sharp plunge?
Why Paytm shares are crashing today?
Thursday's slide in Paytm shares comes after media reports suggested that the rollout of the new MDR fee might get delayed following pushback. A proposal to defer the introduction of MDR on UPI transactions to January 1 from October 15 is currently under consideration by the government, Business Standard reported, citing people familiar with the matter.The NPCI last month announced a Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions above Rs 2,000, effective October 15. The reported delay in the introduction of the fee till next year would keep UPI payments free for merchants through the entire festival season till Christmas, amid pushback from retail traders’ associations.
Paytm was seen as one of the biggest beneficiaries in the MDR regime, positioned to capture the larger absolute opportunity, with analysts estimating FY28 UPI MDR revenue of as much as Rs 1,160 crore.
Paytm had said the introduction of the fee will generate additional revenue from the merchant business for many of the payment transactions that were free earlier. Brokerages hiked their target prices and earnings estimates for the fintech platform following the announcement.
However, the latest reports suggesting a delay in the introduction of the new UPI fee beyond the festive season may have dampened sentiment of investors who were hoping for bumper gains for Paytm following the MDR introduction.
Also read |UPI MDR rollout may be deferred beyond festive season to Jan 1; shares fall: Report
Technical levels for Paytm share price
Paytm slipped below its 50-day EMA, but strong buying interest at lower levels led to the formation of a small-bodied candle with a noticeable lower wick, indicating buying interest at lower levels, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. He noted that the stock has since reclaimed its 50-day EMA.Broadly, the stock has been consolidating in the Rs 1,850-1,558 range since late August. The stock appears to be going through a distribution phase, with a falling ADX indicating a lack of strong directional volatility, Shah said.
On the downside, he sees the stock finding immediate support in the Rs 1,560-1,550 zone. “As long as the stock sustains above this zone, a short-term pullback cannot be ruled out. However, a decisive breach below this support zone could trigger a fresh leg of selling in the stock,” the analyst explained.
Also read | UPI MDR bonanza: Why Paytm may win bigger, but Pine Labs could gain faster
Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
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