Shares of One 97 Communications Ltd (Paytm's parent) fell sharply during the late trading session on Monday. The stock slumped 8.88 per cent to hit a day low of Rs 505.25. It was last seen trading 4.48 per cent lower at Rs 530. At this price, the scrip was 17.97 per cent on a year-to-date (YTD) basis.
Today's drop in the share price came after it was reported that the market regulator has apparently issued showcause notices to Paytm founder Vijay Shekhar Sharma and its directors over initial public offering (IPO) breaches.
Bourses BSE and NSE have sought clarification from the company over the report titled "Vijay Shekhar Sharma, Paytm directors face Sebi show-cause notices over IPO breaches." Paytm's reply is awaited.
"Paytm's stock has been grappling with issues since listing. Now, the current issue of Sebi's reported showcause notices put additional pressure for the medium- to short-term," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.
Existing investors can hold on to the stock but it is suitable only for those with a very high-risk appetite, given the kind of ongoing issues in the company, the market expert added.
Paytm has been under tremendous pressure since Reserve Bank of India (RBI) announced restrictions on Paytm Payments Bank's operations last year amid persistent non-compliance and continued material supervisory concerns.
On technical setup, immediate support on the counter could be seen in the Rs 490-480 zone.
"Paytm has recently experienced a series of higher highs, particularly after reaching a low point in May, and has maintained this trend until now. At present, Rs 490-480 is likely to cushion the trend, and a decisive breach could only disrupt the move. On the higher end, Rs 575-600 is the zone that is likely to provide resilience, and a continuation could be seen only after a decisive breakout," said Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One.
Recently, the digital payments firm sold its entertainment ticketing business to online food aggregator Zomato for Rs 2,048 crore. "This deal stands as a testament to the value Paytm has created through its entertainment ticketing business, bringing choice and convenience to millions of Indians with its services and scale," the company stated in a release.