Paytm shares climb 2% today; here's what technical charts hint at

Shares of One 97 Communications Ltd (Paytm's parent) settled 2.43 per cent higher at Rs 873.10 on Monday. Despite this, the stock has slipped 11.59 per cent year-to-date (YTD). Around 3.85 lakh shares changed hands on BSE today, much lower than the two-week average volume of 37.58 lakh. Turnover on the counter came at Rs 33.12 crore, commanding a market capitalisation (m-cap) of Rs 55,600.11 crore.

Technically, the scrip traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). Its 14-day relative strength index (RSI) came at 56.22. A level below 30 is defined as oversold while a value above 70 is considered overbought.

"Paytm has given a consolidation breakout on daily charts, suggesting an increased optimism around the stock. Besides this, the stock has been sustaining above the critical moving average. Over the short term, the stock might move towards Rs 950. In contrast, Paytm might lose its steam if it slips below Rs 844," said Rupak De, Senior Technical Analyst at LKP Securities.

The stock has a negative price-to-earnings (P/E) ratio of 71.74 against a price-to-book (P/B) value of 4.34. 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 1.1, indicating high volatility.

Recently, Paytm saw some selling pressure after Antfin (Netherlands) Holding BV — a subsidiary of the Ant Group — sold 4 per cent of the total equity share capital of the company on May 14. Post this sale, the fintech investor's stake in Paytm declined from 9.84 per cent to 5.84 per cent.

The digital payment firm, however, staged a rebound after its management said it expects the company's profit after tax (PAT) to turn positive next quarter, factoring in multiple growth triggers such as merchant discount rate (MDR) on UPI and return of wallet.

Paytm's Q4 sales missed the Street estimates, but contribution margin came in line with expectations. Losses climbed sequentially due to a one-time charge for ESOP expenses.