Paytm shares crash 10% on MDR buzz; is there more downside ahead?

One 97 Communications Ltd (Paytm's parent) shares slumped 10 per cent in Thursday's trade to hit a low of Rs 864.20. The sharp drop in the stock price follows the Finance Ministry's clarification on recent reports hinting at a potential reintroduction of the merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions. The ministry dismissed the speculation, reaffirming that no MDR has been imposed on UPI payments.

Technical analysts suggested that the stock looked bearish on charts with immediate support seen at Rs 900-880 levels. One of them advised buying the stock in the Rs 815-820 range.    

"The stock can slip towards Rs 815-820 levels in the near term. If it approaches these levels, investors should consider buying it. Till then, one should avoid the counter," Kkunal V Parar, Vice-President of Technical Research and Algo at Choice Broking told Business Today.

"The stock is placed at the neckline of trend breakout around Rs 900 and any further plunge is likely to disrupt the near-term trend in the counter. For now, Rs 900-880 is likely to be seen as intermediate support, while the bearish gap of Rs 920-950 is likely to obstruct upmove in near period," said Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One.

"Paytm is bearish on daily charts with strong resistance at Rs 960. A daily close below support of Rs 864 could lead to a downward target of Rs 808 in the near term," said Sebi-registered independent research analyst AR Ramachandran.

The counter traded lower than the 5-day and 10-day simple moving averages (SMAs) but higher than 20-day, 30-, 50-, 100-, 150-day and 200-day SMAs. Its 14-day relative strength index (RSI) came at 51.58. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The stock has a negative price-to-earnings (P/E) ratio of 74.45 against a price-to-book (P/B) value of 4.50. Earnings per share (EPS) stood at (-)12.15 with a return on equity (RoE) of (-)6.05. According to Trendlyne data, Paytm has a one-year beta of 1.3, indicating high volatility.